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BUSINESS AND ACCOUNTING METHODS 

INDIAN BUREAU 



REPORT 



TO THE 



JOINT COMMISSION OF THE 
CONGRESS OF THE UNITED STATES 

SIXTY-THIRD CONGRESS 

THIRD SESSION 
TO 

INVESTIGATE INDIAN AFFAIRS 

RELATIVE TO 

BUSINESS AND ACCOUNTING METHODS EMPLOYED IN 
THE ADMINISTRATION OF THE OFFICE 
OF INDIAN AFFAIRS 




WASHINGTON 

GOVERNMENT PRINTING OFFICE 
1915 



mm 



JOINT COMMISSION TO INVESTIGATE INDIAN AFFAIRS. 
Congress of the United States. 

SENATORS. REPRESENTATIVES. 

JOE T. ROBINSON, Arkansas, Chairman. JOHN H. STEPHENS, Texas. 
HARRY LANE, Oregon. CHARLES D. CARTER, Oklahoma. 

CHARLES E. TOWNSEND, Michigan. CHARLES H. BURKE, South Dakota. 

R. B. Keating, Arkansas, Secretary. 

II 



n. of o, 

FEB 2 1915 



REPORT ON THE BUSINESS 
AND ACCOUNTING METHODS EMPLOYED IN THE 
ADMINISTRATION OF THE OFFICE 
OF INDIAN AFFAIRS 



(Prepared for the Joint Commission to Investigate Indian Affairs by the 
Bureau of Municipal Research, New York, August, 1914) 



HI 



I 



OUTLINE OF REPORT ON THE BUSINESS AND ACCOUNTING METH- 
ODS EMPLOYED IN THE ADMINISTRATION OF THE OFFICE OF 
INDIAN AFFAIRS. 



Part I. — Description of Present Organization, Methods, and Procedure. 

Page. 



Letter of transmission 1 

Chapter I. — Introduction 5 

Chapter II. — The organization of the United States Indian Service 11 

Chapter III. — Preparation of annual estimates for appropriations 24 

Chapter IV. — Preparation of annual estimates of revenues and receipts 29 

Chapter V. — Issuing authorities to spend money 33 

Chapter VI. — Requisitions for funds by disbursing officers 59 

Chapter VII. — General description of the principal records of accounts 

kept in the Indian Office 41 

Chapter VIII. — Methods of examination and audit ^ 53 

Part II. — Conditions which Suggest Desirability for Change. 

Chapter IX. — Defects in organization 68 

Chapter X. — Defects in methods of doing business 73 

Chapter XI. — Defects in methods of accounting and reporting 78 



Part III. — Appendices (Separate Documents). 

Appendix 1. — Analysis of financial provisions of the various statutes and 

treaties governing Indian funds. 
Appendix 2. — Detailed outline of organization of the Office of Indian Affairs 

as of July 1, 1912. 

Appendix 3. — Financial statistics and schedule prepared by the Commission on 
Economy and Efficiency, showing analyses of cost functions, organization 
units, and character of expenditure. 

Appendix 4. — Proposed business and accounting procedure of the United States 
Indian Service submitted through the Committee on Economy and Effi- 
ciency of the Department of the Interior. 

Appendix 5. — Treasury circulars Nos. 34, 35, 36 (1911). 



IV 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



PART I.— DESCRIPTION OF PRESENT ORGANIZATION METHODS 

AND PROCEDURE. 

The Joint Commission to Investigate Indian Affairs, 

Sixty -third Congress of the United States, Washington, D. C. 
Gentlemen : At your request the New York Bureau of Municipal 
Research has made an inquiry into the business and accounting 
methods employed in the administration of the Office of Indian 
Affairs. A summary of conclusions will be found in the intro- 
ductory part of this report. While a detailed description of present 
methods and conditions is submitted herewith, it was thought unde- 
sirable to take the time to work out concretely the constructive details 
unless some action were taken which would indicate that these details 
were desired. 

NEED FOR SPECIAL CARE IN MANAGEMENT. 

The need for special care in management of Indian affairs lies in 
the fact that in theory of law the Indian has not the rights of a 
citizen. He has not even the rights of a foreign resident. The 
Indian individually does not have access to the courts ; he can not 
individually appeal to the administrative and judicial branches of 
the public service for the enforcement of his rights. He himself is 
considered as a ward of the United States. His property and funds 
are held in trust. Both of these facts place the Government in the 
position of a guardian, charged with extraordinary care. The Indian 
Office is the agency of the Government for administering both the 
guardianship of the Indian and the trusteeship of his properties. 

CONDITIONS ADVERSE TO GOOD ADMINISTRATION. 

The legal status of the Indian and his property is the condition 
which makes it incumbent on the Government to assume the obliga- 
tion of protector. What is of special interest in this inquiry is to 
note the conditions under which the Indian Office has been required 
to conduct its business. In no other relation are the agents of the 
Government under conditions more adverse to efficient administra- 
tion. The influences which make for infidelity to trusteeship, for sub- 
version of properties and funds, for violation of physical and moral 
welfare have been powerful. The opportunities and inducements to 
peculation are much greater than those which have operated with 
ruinous effect on other branches of public service and on the trustees 
and officers of our great private corporations. In many instances 

l 



2 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



the integrity of these has been broken down. It is not to be accepted 
as a conclusion, however, that those who have been employed in the 
Indian Service have been below others in ability or integrity when 
things have gone wrong. It has been largely due to the conditions 
under which the service has been required to operate. 



In the first place the machinery of the Government has not been 
adapted to the purpose of administering a trust. In the second place 
there has been little sympathy or favorable opinion to demand that 
an effective business machine be developed. In fact the public opin- 
ion which has dominated the Government has been either hostile or 
passively indulgent of abuse. This is one side of the picture. On 
the other side, behind the sham protection which operated largely as 
a blind to publicity, have been at all times great wealth in the form 
of Indian funds to be subverted ; valuable lands, mines, oil fields, and 
other natural resources to be despoiled or appropriated to the use 
of the trader : and large profits to be made by those dealing with trus- 
tees who were animated by motives of gain. This has been the sit- 
uation in which the Indian Service has been for more than a cen- 
tury — the Indian during all this time having his rights and proper- 
ties to greater or less extent neglected; the guardian, the Govern- 
ment, in many instances, passive to conditions which have contrib- 
uted to his undoing. 



And still, due to the increasing value of his remaining estate, there 
is left an inducement to fraud, corruption, and institutional incom- 
petence almost beyond the possibility of comprehension. The prop- 
erties and funds of the Indians to-day are estimated at not less than 
one thousand millions of dollars. There is still a great obligation 
to be discharged, which must run through many years. The Gov- 
ernment itself owes many millions of dollars for Indian monevs 
which it has converted to its own use. and it is of interest to note 
that it does not know and the officers do not know what is the present 
condition of the Indian funds in their keeping. Every community 
bordering on Indian lands still has in it persons who are using every 
influence at their command to obtain official action to the end that 
they may get possession of Indian lands. Great corporations main- 
tain lobbyists and unprincipled agents with a view of getting con- 
cessions, leases, and legislation which are favorable to their own 
selfish purposes, but unfavorable to the Indian. 



As has been said, a primary defect from the viewpoint of the 
Government and the execution of its trust is one of organization. 
Going along with this have been defective and antiquated methods. 
But what has contributed most to a continuation of essential defects 
has been lack of facilities for making available the facts — lack of 
publicity. But in this the Indian Service does not present a new 
problem. The story of the mismanagement of Indian affairs is only 



GOVERNMENT MACHINERY INADEQUATE. 



OPPORTUNITIES STILL PRESENT. 




PRIMARY DEFECTS. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



3 



a chapter in the history of the mismanagement of corporate trusts. 
The Indian has been the victim of the same kind of neglect, the same 
abortive processes, the same malpractices as have the life-insurance 
policyholder, the bank depositor, the industrial and transporta- 
tion shareholder. The form of organization of the trusteeship has 
been one which does not provide for independent audit and super- 
vision. The institutional methods and practices have been such 
that they do not provide either a fact basis for official judgment 
or publicity of facts which if made available would supply evidence 
of infidelity. In the operation of this machinery of government, 
therefore, there has not been the means provided for effective official 
scrutiny and the public conscience could not be reached. 

AMPLE PRECEDENTS TO BE FOLLOWED. 

Precedents to be followed are ample. In private corporate trusts 
that have been mismanaged a basis of appeal has been found only 
when some favorable circumstance has brought to light conditions 
so shocking as to cause those people who have possessed political 
power, as a matter of self -protection, to demand a thorough reor- 
ganization and revision of methods. The same motive has lain 
back of legislation for the Indian. But the motive to political action 
has been less effective for the reason that in the past the Indians 
who have acted in self-protection have either been killed or placed 
in confinement. All the machinery of government has been set to 
work to repress rather than to provide adequate means for justly 
dealing with a large population which has had no political rights. 
There was no constituency in the Government or the people to which 
an appeal to self-interest could be made. Changes in organization 
and methods therefore could come only through some means which 
would regularly make public the facts necessary to an appeal to the 
conscience of those who have no personal interest in Indian affairs. 
This means has been wanting. Appeal has been made only when 
conditions have developed which endangered the lives and health 
of millions of Americans threatened by the outlawry or disease re- 
sults of social neglect. 

CONSTRUCTIVE RECOMMENDATIONS. 

Briefly stated, the constructive recommendations of the report 
are premised on what would seem to be conclusive evidence that the 
funds and properties of- the Indian have not been adequately pro- 
tected in the past. The need for change is found in lack of adequate 
means whereby officers and agents of the Government may be held 
strictly accountable as " trustees " for the funds and properties of 
the Indians, and for the development of the highest efficiency on the 
part of those who perform the function of " guardian " — i. e., those 
who are charged with responsibility for the care, education, health, 
support, and physical welfare and comfort of those who are re- 
duced to the status of wards to the Government. With the view 
that further adaptations should be made to secure these ends, the 
following general recommendations are made: 

1. That there be a systematic reorganization and revision of 
methods. 



4 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

2. That in making these changes, units of organization be estab- 
lished to exercise the function of ;c guardianship " or care, education, 
and physical welfare of the Indian, which are separate and distinct 
from units of organization, which are charged with the exercise of 
functions of " trusteeship." 

3. That in each group of organization units a clear distinction be 
made between the " line " as distinguished from the ; ' staff." That 
is, the " line " organization would be responsible for doing things 
and the " staff " organization would be responsible for advising the 
heads of the line with respect to planning and the manner in which 
plans and orders are executed by others, the staff to be relieved from 
issuing and executing orders which require direct dealings with the 
" line." the Indians, or with the business world. 

4=. That the whole service be taken out of politics and the personnel 
of both branches of the service be so classified and graded with such 
salary rates as to provide a service-wide opportunity for promotions 
based on individual efficiency, instead of having the opportunity of 
the individual so limited as not to offer him a career. 

5. That methods of appropriations be changed with a view to es- 
tablishing a more effective control over the contracting and purchas- 
ing relations, and at the same time reducing the cost and eliminating 
the unnecessary " red tape " of administration. 

6. That the allotments be made under conditions attached to appro- 
priations which would locate administrative responsibility for the 
exercise of foresight in planning work to be done as well as review 
of results, and to this end requiring the establishment of accounts and 
current reports which will show cost of work under each allotment. 

7. That methods of inspection be systematized and developed in 
such manner that the administration may utilize the reports of super- 
visors and special agents more effectively, and to this end to install 
standardized forms of * ; score cards " wherever practicable, on which 
reviewable facts may be reported instead of leaving the whole matter 
to the initiative and discretion of each individual. 

8. That provision be made for the more economic purchase and dis- 
tribution of supplies, materials, and equipment. 

9. That a complete system of double-entry accounting be installed 
which will insure complete, accurate, and up-to-date reports of all 
facts needed by the administrator, by Congress, or by citizens in 
thinking about the business and financial relations of the Indian 
Service. 

CRITICISM OF METHODS, NOT OF PERSONNEL. 

The critical statements which appear in different parts of the re- 
port relate to methods and procedure rather than to officials and 
employees of the Office of Indian Affairs. The incomplete and unsat- 
isfactory accounting system described is largely due to a lack of facil- 
ities and lack of personnel for the installation and operation of an 
up-to-date accounting system rather than to neglect or deficiencies on 
the part of officials, clerks, and employees in the service. For some 
time past it has been realized that the methods now in use are not 
adapted to the character or volume of work which is being performed. 
This realization has brought about from time to time changes which 
have been in the nature of new patches placed on an old garment— 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 5 

i. e., has resulted in" adding new features to the old methods in vogue, 
but not in the installation of a system which is flexible and responsive 
to the needs. A thorough reorganization and a thorough revision of 
methods of accounting and reporting should be made a part of the 
further development of the work of the Office of Indian Affairs. 

SCOPE AND METHOD OF SURVEY. 

The survey was undertaken with the following purposes in view:" 

1. To learn the existing, important business and accounting prob- 
lems confronting the administration of the Office of Indian Affairs. 

2. To state wherein it is thought present methods are defective. 

3. To formulate constructive suggestions with a view in mind of 
providing more up-to-date methods of administration and account- 
ing, by which the interests of the Indian would be better served. 

4. To discuss the advantages which it is thought would be gained 
from the adoption of the constructive recommendations proposed. 

The last two of these purposes have not been carried out in detail 
for the reasons above stated. 

In studying the Office of Indian Affairs the following plan was 
pursued: The organization methods and procedure of the Division 
of Finance and such parts of other divisions and branches of the 
administration as were involved were studied and described. The 
descriptive report in draft form was submitted to heads of the several 
divisions for correction and discussion — all statements of fact con- 
tained in the report as now presented having been reviewed by 
responsible officers in so far as they relate to their respective divi- 
sions. From these statements and descriptions of fact our conclusions 
have been drawn. The conclusions themselves are separately stated, 
so that no difficulty would be experienced in distinguishing matters 
of fact from matters of opinion. 

PERSONAL ACKNOWLEDGMENT. 

The Bureau of Municipal Research is greatly indebted to the Com- 
missioner of the Office of Indian Affairs and the heads of divisions 
in Washington for their helpful cooperation in the survey. Every 
official and emploj^ee interviewed extended to the representatives of 
the bureau the most cordial courtesy, for which hearty and appreci- 
ative acknowledgment is here made. 

Respectfully submitted. 

F. A. Cleveland, Director. 



CHAPTER I. 
Introduction. 

Ours is not the only Government that has had to face serious prob- 
lems occasioned by the fact that peoples of different races, speaking 
different languages, and in different stages of civilization have 
occupied one national territory and have been subject to a common 
government in which one race in its ability to command and enforce 



6 BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 



was dominant. England in India and in Egypt is another illustra- 
tion in point. But no stranger and more complex political status 
can be found than that of the American Indian throughout his rela- 
tions with the American people. 

EAKLY ATTITUDE OF THE WHITES. 

At first a roving, disorganized public enemy, whom it was not 
* possible to conquer in a decisive way and to treat with as a conquered 
nation of power, the Indian harrassed our westward moving fron- 
tier from the days when it stretched along the Atlantic seaboard, 
but was only a few miles inland from the coast, until it reached be- 
yond the Mississippi River. The hostile resistance of what by the 
Indian was regarded as intrusion, the atrocities that often char- 
acterized his continuous and petty raids, as well as the few organized 
onslaughts on our frontiersmen, and his futile resistance to the white 
man's occupancy of the territory over which legal sovereignty had 
been acquired without, in all instances, his full knowledge and with- 
out an understanding that he had relinquished his ancestral inheri- 
tance, caused the American people, down to the early decades of the 
nineteenth century, to care little about his fate. 

CHANGE IN PUBLIC SENTIMENT. 

The latter part of the nineteenth century, however, witnessed a 
great change in the national sentiment toward the Indian. ' McMas- 
ter writing in 1884, in the first volume of his History of the People 
of the United States, pictures this transition in popular sentiment 
when he says: 

The opinion which many careful and just-minded persons of our time have 
formed touching the Indians, of whom the settlers in the borderland then stood 
in constant dread, is a singular mixture of truth and romance. Time and 
absence have softened all that is vile and repulsive in his character and left 
in full relief all that is good and alluring. We are in no danger of being toma- 
hawked. We are not terrified by his warwhoop. An Indian in his paint and 
feathers is now a much rarer show than a Bengal tiger or a white bear from 
the Polar Sea. Of fifty millions of human beings scattered over the land, not 
five millions have ever in their lives looked upon an Indian. We are therefore 
much more disposed to pity than to hate. 

THE ABSENCE OF AN INDIAN POLICY. 

From the viewpoint of the Government and its agencies for deal- 
ing with the Indian, the fact which is most significant is the lack of 
anything worthy of the name of a policy prior to the passage by 
Congress of the Dawes Act in 1887. This act (providing for the 
allotment of lands in severalty and granting individual citizenship 
and therefore looking to the breaking up of all vestige of tribal 
relations and the gradual absorption of the Indian into the body 
politic of the Nation) had for its object bringing Indian institu- 
tional relations into harmony with those of his white neighbors. 
The colonists had, it is true, taken from the Indian his land or so 
much as they needed upon one pretext or another, usually under the 
guise of barter in which the bargaining power was very unequal, but 
then there was still plenty of land left for the Indian to roam over 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



7 



without being compelled to change his traditional habits of gaining 
his livelihood. The method was to force him to move, and he was 
required to keep " on the move " from the earliest settlement with- 
out any purpose of place for his ultimate assimilation. Missionary 
enterprise followed him and found him hopeful material for the 
propagation of the gospel. Cromwell's Parliament in 1649 made 
provision for disseminating religious teaching to the Indians of New 
England, and Roger Williams proclaimed in 1654 the widespread 
conversion of the Indians of New England. The colonists also guar- 
anteed friendly Indians certain legal rights, allotments of land in 
severalty to individual Indians, annuities, and education advantages 
which in some instances went further than similar experiments a 
century or two later. 1 Thus the Jamestown colonists set aside the 
thousand acres of land for an Indian university. The founding of 
William and Mary College (1691) and Harvard College in 1650 in- 
cluded in their purposes the education of Indian youth. Dartmouth 
is said to have begun as Moore's Charity School for Indians. The 
British Government prior to the Revolution had two superintendents 
of Indian affairs appointed by the crown, who determined its own 
policies and issued orders. The system of annuities began under the 
American Government as the result of a remarkable treaty made by 
Gen. Wayne in 1795, but this was considered more as a method of 
keeping the Indians quiet than as a policy of ■ improvement. Presi- 
dent Jefferson proposed in connection with the Louisiana Purchase 
that all the land west of the Mississippi, east of the Rocky Moun- 
tains, and north of the thirty-second parallel of latitude should be 
left to the Indians and that they should be gradually moved there. 
Calhoun in a report in 1825 recommended that the Indians be given 
a perpetual property right in a tract west of the Mississippi, and 
President Monroe in a special message, January 27, 1825, told Con- 
gress that the Indians ought to be " invited " to remove to the region 
lying "between the present States and Territories, and the Rocky 
Mountains and Mexico." The Indians were not disposed to move 
voluntarily and the Government was not ready to use compulsion 
or to define the limits of a permanent Indian country, though states- 
men and politicians played with that idea for a half century, from 
John Quincy Adams's time to Grant's administration. 

DEVELOPMENT OF AN INDIAN SERVICE. 

The Secretary of War was made responsible for Indian affairs 
when the War Department was created in 1789 and they remained 
with the War Department until 1849 when the Department of the 
Interior was created and the Indian Service transferred to civil con- 
trol. An Indian bureau had been established in the War Depart- 
ment in 1824. The office of Indian Commissioner was created in 1832 
and a Department of Indian Affairs organized in 1834, at which 
time the appointees of the service were mostly civilians. After 1849 
Congress debated for years the expediency of transferring the In- 
dian Service back to the War Department and the authority of 
the Government was weakened by a constant fluctuation of responsi- 
bility between the two departments due to the lack of a well-defined 



1 See F. A. McKenzie, the Indian in Relation to the White Population, 1908. 



8 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



policy and the difficulties of securing an honest and efficient body of 
public officials to deal with the vast property interests of the In- 
dians, the exploiting whites who surrounded their reservations, the 
problems of supporting and educating a large number of persons un- 
der condition^ of life for which they were wholly unfitted by 
heredity, tradition, and training. 

A recent writer on Indian affairs says of the administration of 
the Office of Indian Affairs : 1 

The Indian as an obstacle to the advance of civilization and the development 
of the West was turned over to the Department of War to be dealt with sum- 
marily and brought to terms. The Indian as a dependent upon the civilization 
which he was unable effectively to obstruct was assigned to the care of the 
Department of the Interior. And the Indian Service of that department with- 
out adequate authority to maintain order or even a sufficient force to make its 
reasonable demands respected, was then confronted with the problem of con- 
fining its charges within the limits of their respective reservations and of in- 
structing them in the rudimentary principles of self-support and civilization. 

THE BEGINNING OF RESPONSIBLE ADMINISTRATION. 

These unwholesome relations could not continue indefinitely. The 
vast property interests involved in the administration of the trustee- 
ship for the Indians' lands held as common property and for the 
large trust funds whose income or principal was to be spent for his 
support and education led naturally and inevitably in the absence 
of a definite policy and the creation by Congress of an appropriate 
machinery for the execution of its vascillating commands to serious 
maladministration of the trust. When the Board of Indian Com- 
missioners was created (1869) many persons in Congress believed 
that three-fourths of all appropriations of Indian monej^s went to 
politicians in Washington and less than one-fourth reached the In- 
dians. 2 The board is an honorary body appointed by the President 
Avithout reference to the Senate and is composed of 10 " men emi- 
nent for intelligence and philanthropy " to correct abuses, and in 
the language of a former Commissioner of Indian Affairs, Francis 
E. Leupp (see The Indian Problem, New York, 1910) : 

to serve as a sort of protective medium between the Indian Office and outside 
criticism. To this end it was accustomed to send a committee to each ware- 
house at the season of contract letting, who would examine the samples offered, 
pass judgment on the prices bid, and help the commissioner to reach satisfac- 
tory decisions in cases where he felt any uncertainty. From time to time a 
member of the board would go into the Indian field, inspect certain reservations 
and schools and report on the conditions there. As the contract supply sys- 
tem gradually worked out of its vicious rut and was put upon a sound footing 
with proper safeguards, the Board of Indian Commissioners devoted more of 
its attention to educational matters and its personnel came to be composed in 
less measure of business men and to include a larger percentage of clergymen 
and scholars. 

The powers of the board are merely advisory, and while it has 
served a useful purpose in creating a wider interest in Indian af- 
fairs among bodies of more or less formally organized, philanthropi- 
cally disposed private citizens, such as those who have met annually 
for over 30 years in the Lake Mohonk Conferences of Friends of the 
Indian and Other Dependent Peoples, it has accomplished little of 
definite value in the solution of problems of Indian administration; 



1 See E. M. Rushmore. The Indian Policy, etc., 1914, page 19. 

2 Elsie M. Rushmore, " The Indian Policy During Grant's Administration" (1914). 



BUSINESS AND ACCOUNTING METHODS INDIAN BUKEAU. 



9 



perhaps it has helped to weaken rather than develop what is most 
needed, namely, official responsibility and the establishment of a 
definite administrative policy. 

EARLY VIEW OF RESPONSIBILITY. 

The courts have held consistently that the status of the Indian as 
inherited from the English and Spanish who preceded the American 
Government in its exercise of authority over him is that of a state 
of tutelage. He is a ward of the state which performs the function 
of a guardian for his person and property. They are persons under 
legal disability. In ex parte Crow Dog (109 U. S., 556) the United 
States Supreme Court said : 

The Sioux Indians, notwithstanding the pledge contained in their agreement 
that the United States would secure them in self-government, were to be sub- 
ject to the laws of the United States not in the sense of citizens but, as they had 
always been, as wards subject to a guardian ; not as individuals, constituted 
members of the political community of the United States with a voice in the 
selection of representatives and the framing of laws, but as a dependent com- 
munity who were in a state of pupilage advancing from the condition of a sav- 
age tribe to that of a people who through the discipline of labor and education 
it was hoped might become a self-supporting and self-governing society. 

CONGRESSIONAL CONTROL ESTABLISHED. 

Congress has granted citizenship in " bulk " at different times to 
various tribes; it dealt with questions of status from the beginning 
until 1867 through its treaty-making power regarding the Indians in 
tribal relation. Suddenly and apparently without any full realiza- 
tion that an important change in policy was enacted it added to the 
Indian appropriation bill of 1872 as a rider the clause — 

that hereafter no Indian nation or tribe within the territory of the United 
States shall be acknowledged or recognized as an independent nation, tribe, or 
power with whom the United States may contract by treaty. 

This was the result of a stubborn fight between the House and 
Senate over the appropriation of money called for to carry out 
treaties ratified by the Senate and concerning which the House had 
not been consulted. Of this the Supreme Court, in United States v. 
Kagaina (118 U. S., 375), said : 

After an experience of a hundred years of the treaty-making system of the 
Government, Congress has determined upon a new departure — to govern them 
by acts of Congress. 

NEED FOR CONSTRUCTIVE PROGRAM SQUARELY FACED. 

The undesirability of-a continuation of the status of tutelage was 
squarely faced for the first time in the passage of the Dawes Act of 
1887. This looked to the breaking up of all tribal relations and pro- 
vided for the allotment of the Indians' lands in severalty. It also 
forecast the allotment in severalty of the Indians' funds. It was 
premised on a broad social philosophy, viz, that two races can not 
occupy the same territory with mutual advantage unless they have a 
common institutional adjustment. The institution of property and 
the institution and laws of social control must be equally applicable 
to both. There must be a common culture, common ideals, and com- 
mon rights. 



10 BUSINESS AXD ACCOUNTING METHODS INDIAN BUREAU. 

The permanent annuities had already been largely compounded 
under agreements and treaties into lump sums to be held in trust 
until they could with safety be allotted in severalty or expended 
upon the education of the Indian or the improvement of his lot. His 
weakness in ability to take care of his own interests, to resist the 
temptations of the vices of civilization, especially to resist the allure- 
ments of the white man's alcoholic beverages and to support himself 
under the industrial and agricultural economy of the white man 
made the problem of deciding when he ought to be given his own 
property to manage and the rights and duties of citizenship necessary 
to enable him to protect his property a very difficult question. 

THE SIGNIFICANCE OF THE DAWES ACT. 

The economic policy established by the Dawes Act was to begin 
with the allotment in severalty of his lands by granting a trust 
patent to individual Indians whenever the President thought the 
time was ripe to carve up a reservation and allot to each member of 
the resident tribe a certain number of acres, depending upon the 
character of the land. The Government was to hold the land for 25 
years and then give a patent in fee in exchange for the trust patent. 
The trust patent, however, gave the patentee all the privileges of 
citizenship, but did not require of him the full responsibilities of 
citizenship. Subsequently this was thought to be too great freedom 
for the Indian's welfare. 

MODIFICATION OF POLICY BY THE BURKE ACT. 

The Government, when it had released its special guardianship, 
could no longer protect him in any different way than it could the 
white man. The protection given him as a citizen was inadequate. 
He was debauched through liquor traffic and the aggressive exploita- 
tion of unprincipled white neighbors, so the Burke Act (1906) was 
taken as a step backward. It was a partial return to the older status 
of tutelage. Under the Burke Act citizenship was postponed until 
the patent in fee was granted, and this was made a little easier to 
secure without recourse to special act of Congress at the expiration 
of the 25-year probationary period of individual ownership. It is 
thought that in the end the Burke Act will better accomplish the 
emancipation of the Indian which the Dawes Act contemplated, but 
neither recognized the fact that the Indian (except in rare individual 
cases) does not desire citizenship. He thinks of land only in terms 
of communal ownership ; to him a title in fee simple is not a prize 
worth striving for. 

TWO-SIDED CHARACTER OF THE PROBLEM. 

Leaving the historic background of race differences and antago- 
nisms, partly social, partly economic, looking to a future constructive 
policy which would do both social and economic justice, this policy 
must be one that must find expression in two ways. 

1. The social adjustment must be formed through education — 
through the working out of new ideals which are in harmony with 



BUSINESS AND ACCOUNTING METHODS IND1AJS 1 BUKEAU. 



the Anglo-Saxon institutional and social life — a life which, whether 
preferable or not, when considered abstractly, nevertheless is domi- 
nant. 

2. The economic adjustment must be formed through the utiliza- 
tion of a Government trusteeship until the Indian, either individually 
or acting in some organized corporate capacity, is able to cope with 
his white neighbor. 

Correspondingly, the administration of Indian affairs presents a 
twofold problem. On one side it is educational and protective; on 
another side it is a matter of business. 

THE CARE ASD EDUCATION OF THE INDIANS. 

The administration of the educational side of the problem requires 
that those charged officially with responsibility for his guardianship 
in some way come to understand Indian psychology. Before any 
plans can be made which look toward constructive educational re- 
sults the officer must consider the Indian as an Indian and not treat 
him and legislate for him as though he were a diluted specimen of 
the American pioneer white man. Educational and social progress 
must begin with a full recognition and appraisement of what is the 
Indian's mental and social equipment. Ways and means may be 
found for developing in him qualities which will make of him a citi- 
zen in whom the ownership and control of his own property may be 
safely vested. This is a man's work in itself. It requires high 
specialization; it involves scientific and professional considerations 
that in themselves make necessary the closest application. 

ADMINISTRATION OF PROPERTY AND FUNDS. 

On the other hand, there are great properties and funds to be ad- 
ministered. In so far as their use is related to the care and education 
of the Indian they are a part of the human side of the problem. In 
so far, however, as the management of properties has to do with the 
outside world ; in so far as it involves the element of trusteeship for 
the thousand million dollars of resources which by right belong to 
the Indians; in so far as management has to do with inspection, 
audit, and review of the acts of custodians and purchasing agents, 
the business side of the Indian problem should be independently con- 
sidered. 

BUSINESS SIDE ALONE SUBJECT OF THIS REPORT. 

It is the business side of the administration of the Office of Indian 
Affairs which is the subject of this report. 



CHAPTER II. 

Organization of the United States Indian Service. 

As has been indicated in the introductory part of this report, the 
Government has undertaken to perform the functions both of guar- 
dian over the persons and trusteeship over the property of the 



12 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

Indians. For dealing with the Indians in the capacity of personal 
guardian the Government has provided itself with an organization 
which is generally known as the " Indian Office." The general out- 
line of the organization of the Indian Office is shown by Chart I. 
This shows that the Indian Office is a part of the Department of the 
Interior. It. however, is so independent in all of its activities that 




it stands in much the same relation as a separate department. The 
details of organization are shown in "Appendix 2 " of this report. 

THE PRESIDENT. 

The President stands in a peculiar relation to the Indian Service 
in that he has provided himself with an independent agency for 
keeping in touch with Indian affairs. This agency is known as the 
" Board of Indian Commissioners." Their functions are advisory 



BUSINESS AND ACCOUNTING METHODS INDIAN BUBEAU. 



13 



and supervisory. They are appointed by and report directly to the 
President. 

THE SECRETARY OF THE INTERIOR. 

Under the Secretary of the Interior the head of the Indian Office 
is known as the " Commissioner of Indian Affairs." Due to the 
uniqueness of the Indian problem, however, and the almost unrelated 
character of its work, the Secretary has provided himself with two 
independent agencies for keeping in touch with this work, viz : 

1. A group of inspectors who are attached directly to the office of 
the Secretary. 

2. A commissioner of the Five Civilized Tribes. 

OFFICE OF COMMISSIONER OF INDIAN AFFAIRS. 

The Commissioner of Indian Affairs has under him an assistant 
commissioner and a chief clerk who is known as second assistant 
commissioner. The assistant commissioner acts in the capacity of 
vice commissioner; that is, he may act for the commissioner in his 
absence or to such extent as he may be deputized. He is not, however, 
strictly speaking, in the direct line of administration, as all of the 
processes run direct to the commissioner himself. The second as- 
sistant commissioner or chief clerk has directly under him the library 
of the Indian Office, the stenographic section, and the Mail and 
Files Division. The Commissioner of Indian Affairs also has a pri- 
vate secretary who performs service of a special and confidential 
character, etc. In addition to this, there is a law office which is 
organized for advising the commissioner and his assistants with 
respect to matters referred to it, and to participate in the general 
routine of administration, so far as may be thought desirable. The 
office also has a section known as the " heirship " section ; that is, it 
undertakes to obtain information with respect to the heirs of per- 
sons who in tribal relation have property rights to be investigated 
or protected. There are also a number of boards to advise the com- 
missioner in matters of administration, one of which — a board of 
review — is a permanently detached organization. A number of other 
boards are made up of persons ex officio who occupy other posi- 
tions in the service, as for example, the board of " estimate and 
apportionment." 

ADMINISTRATIVE DIVISIONS OF INDIAN OFFICE. 

The central office administration of the field service is conducted 
through three administrative divisions and two independent sections, 
as follows: 

Education Division. 

Land Division. 

Finance Division. 

Forestry Section. 

Irrigation Section. 

74564—15 2 



14 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



The various sections or branches of work conducted by each of 
these administrative units are shown on Chart II. 




EDUCATION DIVISION. 



The title " Education Division " is really a misnomer. The work 
of the Division of Education is to pass administratively on prac- 
tically all questions not passed on by the other three, as follows : 



BUSINESS AND ACCOUNTING METHODS INDIAN BUKEAU. 15 

1. The law and order section has the direction of the work having 
to do with the suppression of the liquor traffic, marriage, divorce, 
Indian dances, questions involving matters of mortality and dis- 
cipline, minor charges against employees, and general administra- 
tive subjects not coming within the province of the other sections. 

2. The school section has to do with the management and teach- 
ing in schools both on and off of the reservations — day schools and 
mission and contract schools. 

3. The health section handles work conducted by eye specialists, 
dentists, and physicians throughout the whole Indian Service. 

4. The industries section handles work that has to do with the 
industrial development of the properties of the Indian, farming, 
vocational training of adults, the control over the Indian's individ- 
ual rights — that is, the individual Indian moneys — apportionment of 
shares of tribal funds, the construction of buildings for industrial 
purposes, matters having to do with trades, etc. . 

5. The supplies section has to do with the purchasing of supplies 
by contract and open-market order as well as materials for construc- 
tion and the supervision of warehouses and transportation of pas- 
sengers and freight. 

6. The appointments section in this division handles all matters 
affecting the classified personnel of the field. 

LAND DIVISION. 

The Land Division has sent to it all questions requiring adminis- 
trative action that come to the commissioner or require action by him 
pertaining to the lands of the Indians. This division has in it four 
sections, each of which is charged with duties as follows: 

1. The contract section is charged with the duties having to do with 
the leasing of Indian lands for agricultural and other purposes. 

2. Record section has to do with maintaining records of titles of 
Indian land, exclusive of the Five Civilized Tribes. 

3. The sales section is charged with the duty of looking after sales, 
mortgages, patents in fee, and other conveyances relating to Indian 
land, exclusive of the Five Civilized Tribes. 

4. The allotment section is charged with the administration and the 
making of allotments of Indian lands, exclusive of the Five Civilized 
Tribes. 

5. The Five Civilized Tribes section is charged with all land mat- 
ters of these tribes, except leases. 

FINANCE DIVISION. 

The Finance Division has the administrative examination of the 
accounts of disbursing agents, the keeping of funds, the examina- 
tion of claims to be paid by the Treasury Department, etc. This 
division has in it three sections, one of which handles the accounts 
current; another, the claims which are settled direct; and the third 
is charged with keeping the books and other financial records. It is 
in this particular section that financial reports are compiled. 

FOKESTRY SECTION. 

The forestry section constitutes practically an independent division. 
The administrative work of this section is similar to that of the 



16 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

Education and Land Divisions so far as the direction of agency- 
affairs in general is concerned ; but there are duties of a specialized 
character in relation to the care and use of the timber resources of 
the Indians. Many of the problems which arise in the management 
of the Indian timber lands are of a technical nature and the work 
of the section involves a consideration of the scientific aspects of for- 
estry in addition to the purely routine phases of office administration. 
This section net only passes upon all questions as to the protection, 
utilization, and reproduction of forest crops as presented from the 
various superintendencies but also directs exclusively the inspection 
and administration in the field by a force of men specially trained in 
forestry theory and practice. 

IRRIGATION SECTION. 

A separate section has been established in the Indian Office at 
Washington to keep in touch with the field-irrigation service. While 
this is separately conducted it has not been given the official status of 
an administrative division. 

CENTRALIZED INSPECTION DIVISIONS. 

In the Indian Office a distinction is made between what may be 
called the " line " organization and the " staff " organization. That 
which has just been described is in the nature of a " line " organiza- 
tion; it represents a line of administrative authority and respon- 
sibility for the work which is done in the field. Alongside of this 
is another organization which, in part at least, is not responsible for 
work done, but which is responsible for reporting on the conditions 
found and the acts performed by those who are in the " line " organ- 
ization. This organization has several distinct parts. Directly 
under the Secretary of the Interior is a staff of inspectors who are 
relieved entirely from the routine work of administration and made 
free to keep in touch with what is going on in any part of the Indian 
Service that may be suggested. Under the Commissioner of Indian 
Affairs there are four branches or organizations independent of one 
another; namely, schools and reservations, forestry, irrigation, and 
liquor traffic. 

The schools and reservations are under officers known as super- 
visor of Indian schools, supervisor of industries, medical supervisor, 
supervisor of construction, and special agents who make special 
investigations. 

Forestry is under officers known as supervisor of forests and 
deputy supervisor of forests. 

Irrigation is under officers known as chief inspector of irrigation, 
assistant inspector of irrigation, and superintendent of irrigation. 

Liquor traffic is under officers known as chief special officer, assist- 
ant chief special officer, special officer, and deputy special officer. 
The work of this service is of a special nature and is charged with 
the duty of protecting and apprehending those guilty of violating 
both the Federal and State laws with reference to the sale of liquor 
to Indians and its introduction into what is termed the " Indian 
country." 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



17 



THE FIELD ORGANIZATION. 

All of the organization which has so far been described is in the 
nature of an overhead supervisory and inspection service. The real 
work for which the Indian office exists is performed in the field — that 









u 








/" 










° ? 








1 5 

o ? 




1 






TOR 




- i 




s?* rrr 



is, on the reservation, in the schools, and other places where the In- 
dians live and have their properties. The field organization is made 
up of three services, namely : Superintendences, the field irrigation 
service, and the field allotment service. 



18 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



INDIAN STJPEE INTENDENCIES. 

The unit of organization in the field for handling all of the local 

problems except tnose of allotment and a part of the irrigation proj- 
ect is what is known as a " superintendency." The character of the 
organization and activities performed under one of the larger super- 
intendencies is illustrated by the following outline of the Kosebud 
Agency in South Dakota : 

Outline showing organization of the Rosebud superintendency, South Dakota, 

July 1. 1912. 



1. Superintendent. 1 $2,450 

1. Agency — 

1. General administration — 

1. Chief clerk : 1 1, 400 

2. Clerk. 1 900 

3. Assistant clerk 1 720 

4. Lease clerk 1 1, 100 

5. Assistant lease clerk 1 840 

6. Issue clerk 1 780 

2. Health and sanitation — 

X Physician. 1 1,200 

2. Physician. 1 720 

3. Agricultural instruction, adult Indians — 

1. Additional farmers 6 900 

4. Industrial instruction, adult Indians (also work under 

" Care of buildings and grounds) — 

1. Carpenter 1 600 

2. Blacksmith 1 720 

3. Blacksmith 1 240 

4. Wheelwright. 1 1,000 

5. Care and protection of stock — 

1. Stock detective 1 1,000 

2. Stockman. 1 720 

6. Policing, maintaining order, etc. — 

1. Chief of police 1 420 

2. Police privates , 38 240 

7. Care of timber — 

1. Forest guard 1 960 

8. Care of buildings and grounds (see also "Industrial in- 

struction) — 

1. Watchman. 1 480 

2. Laborer 1 360 

3. Laborers __— 2 240 

9. Miscellaneous — 

1. Butcher. 1 480 

2. Teamsters 3 360 

2. Rosebud Boarding Sr-hool — 

1. Principal and physician 1 1,500 

1. General administration — 

1. Assistant clerk 1 840 

2. Disciplinarian 1 720 

2. Health and sanitation — 

1. Nurse 1 600 

3. Academic instruction — 

1. Teacher 1 660 

2. Teacher 1 600 

4. Kindergarten instruction — 

I. Kindergartner 1 600 

5. Industrial instruction — 
1. Boys'— 

1. Farming, gardening, etc. — 

1. Farmer 1 600 

2. Carpentering — 

1. Carpenter 1 660 



BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 



19 



1. Superintendent — Continued. 

2. Rosebud Boarding School — Continued. 
1. Principal and physician — Continued. 
5. Industrial instruction — Continued. 
1. Boys'— Continued. 

3. Heating and lighting plant — 



1. Engineer 1 $900 

2. Assistant engineer 1 600 

2. Girls'— 

1. Matron 1 600 

1. Sewing — 

1. Seamstress. 1 500 

2. Laundering — 

1. Laundress 1 480 

3. Baking— 

1. BMker 1 480 

4. Cooking — 

1. Cook „ 1 500 

5. Housekeeping — 

1. Assistant matron ______ 1 520 

6. Care of buildings and grounds — 

1. Assistant - 1 300 

2. Laborers. , 3 660 

3. Laborer v 1 420 

4. Laborer 1 300 

3, Rosebud day schools — 

1. Day school inspector 1 1, 200 

1. General administration — 

1. Financial clerk 1 900 

2. Assistant clerk 1 840 

2. Health and sanitation — 

1. Physician 1 1,200 

3. Industrial instruction, adult Indians (women) — 

1. Female industrial teachers. _. 4 720 

2. Female industrial teacher . 1 600 

4. Big White River day school — 

1. Teacher 1 720 

2. Housekeeper . 1 300 

5. Bull Creek day school — 

1. Teacher _ . 1 720 

2. Housekeeper . 1 300 

6. Corn Creek day schools — 

1. Teacher .____. 1 720 

2. Housekeeper 1 300 

7. Cut Meat day school — 

1. Teacher 1 720 

2. Housekeeper : 1 300 

8. He Dog day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

9. Little Crow day school — 

1. Teacher. 1 720 

2. Housekeeper 1 300 

10. Little White River day school — 

1, Teacher . 1 720 

2. Housekeeper 1 300 

11. Lower Cut Meat day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

12. Milk's Camp day school — 

1. Teacher 1 1,000 

2. Assistant teacher 1 500 

3. Housekeeper 1 300 

13. Oak Creek day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 



20 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



1. Superintendent — Continued. 

2. Rosebud Boarding School — Continued. 
1. Principal and physician — Continued. 
5. Industrial instruction — Continued. 
3. Rosebud day schools — Continued. 
1. Day school inspector — Continued . 

14. Pine Creek day school — 

1. teacher , 1 $720 

2. Housekeeper 1 300 

15. Red Leaf day school — 

1. Teacher 1 720 

2. Housekeeper . 1 300 

16. Ring Thunder day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

17. Agency day school — 

; 1. Teacher 1 600 

18. Spring Creek day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

19. Upper Cut Meat day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

20. Whirlwind Soldier day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

21. White Thunder day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

22. Black Pipe day school — 

1. Teacher 1 720 

2. Housekeeper 1 300 

23. Ironwood day school — 

1. Teacher -1 720 

2. Housekeeper 1 300 

24. Repair of day school buildings — 

1. Carpenter 1 720 

Altogether there are over 200 of these agencies. Besides, there is 
an organization for looking after Indians who are not within the 
Jurisdiction of any superintendency — as, for example, a special agent 
in charge of the scattered bands of Indians in Utah, the commission 
to negotiate with the Seminole Indians in Florida, etc. 

For purposes of administration, the Indian superintendences are 
grouped in six districts, as follows : 

District No. 1 — embracing Colorado, New Mexico, Utah, Wyoming, Kansas, and 

all of Oklahoma except the Five Civilized Tribes. 
District No. 2 — embracing Arizona, California, and Nevada. 
District No. 3 — embracing Nebraska, North Dakota, and South Dakota. 
District No. 4 — embracing Idaho, Montana, Oregon, and Washington. 
District No. 5 — embracing Minnesota, Wisconsin, Michigan, Iowa, Pennsylvania, 

North Carolina, New York, and Virginia. 
District No. 6 — embracing the Five Civilized Tribes in Oklahoma. 

The several superintendencies which are organized as district 1 
are shown on Chart 6. 

THE FIELD IRRIGATION SERVICE. 

This branch is organized for the purpose of handling all irrigation 
matters. It has supervision of surveys, estimates, and construction 
of all the irrigation work in the service. 

The organization consists of 1 chief inspector of irrigation, who 
performs the duties of a chief engineer ; 1 assistant inspector of irri- 
gation, who performs the duties of assistant chief engineer; and 7 
superintendents of irrigation. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 



21 



The arid region is divided into five districts, and each district is 
under the direct supervision and charge of a superintendent of 



irrigation. 




me- 



One of the other superintendents of irrigation is a skilled 
chanical and electrical engineer, and has general charge of construc- 
tion and operation of all mechanical and power plants. 

The seventh superintendent of irrigation is a man with special 
knowledge of irrigation law and water rights. 



22 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



Under the present plan all surveys for irrigation work are made 
under the supervision of the superintendent of irrigation in whose 
district the reservation is located. Construction is - also under the 
same supervision, except where it is of suc^i small extent that it is 




more economical to have it done under the supervision of the super- 
intendent of the reservation. 

Maintenance and operation on the larger reservations are also 
under the supervision of the superintendent of irrigation, but on the 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



2a 



smaller and less important ones it is under the sueprintendent of 
the reservation. 



FIELD ALLOTMENT SERVICE. 



Field allotment service is composed of three classes of persons who 
are directly responsible to the Commissioner of Indian Affairs, 
namely: (1) the appraising commissioner; (2) special allotting 




agents; (3) employees on reservations acting as allotting agents. 
The work of the allotting service is to apportion or allot tribal lands 
to individuals for which purpose jt is necessary to have surveys made 



24 BUSINESS AND ACCOUNTING METHODS INDIAN BUKEAU. 

and other work done in order to establish a basis for allotment. 
The allotment service falls under the Land Division in the Indian 
Office at Washington in which there is an allotment section. This 
service may also be brought independently under scrutiny of the 
general inspection staff, as well as the special agents under the Com- 
missioner of Indian Affairs. The outline of the organization of the 
field service is shown on Chart 5. 



CHAPTEE III. 
Preparation of Annual Estimates for Appropriations. 

The methods and practices of the Office of Indian Affairs, the 
purpose of which is to produce information as a basis for official 
action, or as an account of stewardship, are described under the fol- 
lowing heads : 

1. Preparation of the annual estimates for appropriations by Con- 
gress. 

2. Preparation of the annual estimates of revenues and receipts. 

3. Issuing authorities to spend money. 

4. Requisition for funds to disbursing officers. 

5. Methods of accounting. 

6. Examination and audit. 

The first of these is the subject of this chapter. The other sub- 
jects are discussed in the chapters which follow. 

THE PURPOSES OF ESTIMATES. 

The purpose of the annual estimates for appropriations is to pre 
vide the Office of Indian Affairs with a definite schedule of needs o 
the different agencies and schools for a fiscal year. The mean 
selected for doing this is to require each disbursing officer of ai 
agency or school, in conference with other officers and employees, t( 
formulate annually, upon blank forms furnished for this purpose, s 
program of subsistence and maintenance for each agency or school 
falling under his jurisdiction. These are forwarded to the Indian 
Office with the date filled in, showing in estimate form the amounts 
requested for use during the entire fiscal year in the office, in schools 
and shops, for farm work, repairs, erection of buildings, etc., as well 
as the amounts requested for the support of the Indians. 

THE FORM USED. 

The form used for advance estimates for appropriations (#5-265) 
is so arranged as to show in the heading the functions (or kind of 
work carried on by each agency reporting) and the appropriation 
for each appropriation item. That is, one sheet is used for each 
appropriation item of which expenditures for each function or 
activity are paid. The detail analysis of estimated expenditures on 
each sheet is as follows : 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



25 



VERTICAL. 

(Character of expenditures.) 

Supervision of Indians: 

Current expenses. 

Repairs to buildings and property. 

New construction and equipment. 

Other expenses. 
Total. 
Education : 

Current expenses. 

Repairs to buildings and property. 

New construction and equipment. 

Other expenses. 
Total. 
Health : 

Current expenses. 

Repairs to buildings aDd property. 

New construction and equipment. 

Other expenses. 
Total. 

Agriculture and stock: 
Current expenses. 
Repairs to buildings and property. 
New construction and equipment. 
Other expenses. 
Total. 
Allotments : 

Current expenses. 
Repairs to buildings and property. 
New construction and equipment. 
Other expenses. 
Total, 
rrigation : 

Current expenses. 
Repairs to buildings and property. 
New construction and equipment. 
Other expenses. 
Total, 
forestry : 

Current expenses. 
Repairs to buildings and property. 
New construction and equipment. 
Other expenses. 
Total. 

Field matrons : 

Current expenses. 
New equipment. 
Total. 

Suppression of liquor traffic": 
Current expenses. 
New equipment. 
Total. 



HORIZONTAL. 

(Articles to be purchased.) 

Salaries and wages (present serv- 
ices). 

Traveling expenses (transportation 

of persons). 
Transportation of supplies. 
Telegraph and telephone service. 
Printing, binding, advertising, etc. 
Heat, light, and power service. 
Dry goods, wearing apparel, etc. 
Fuel. 
Forage. 

Medical and surgical supplies. 
Subsistence supplies. 
Equipment. 

Material for construction and repairs. 
Rent. 

Miscellaneous. 
Total. 

Allowed for fiscal year 1914. 
Remarks by superintendent 
Amount allowed by Indian Office. 
Remarks by Indian Office. 



For the guidance of the disbursing officers, the following instruc- 
tions are printed on the reverse side of the budget estimate sheet : 

In order that an intelligent estimate may be made to Congress for appropria- 
tions for the fiscal year ending June 30, 1.915, d'sbursing officers are required 
to indicate their needs for that year on these blanks, grouping all expenses 
payable from a given appropriation or fund on the same sheet. Be careful to 
designate correctly each appropriation or fund and do not include in any ap- 
propriation items which are not payable therefrom. 

The column beaded " Remarks by superintendent " should be used for justifica- 
tion, if space is sufficient ; if not, prepare justification on separate sheet, number- 
ing items on sheet to correspond with numbers used on justification. 



26 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



Section 26 of the Indian appropriation act for the fiscal year 1914 provides 
that estimates shall be submitted in detail for each activity of the service, such 
as supervision of Indians, education, health, agriculture and stock, allotments, 
irrigation, forestry, etc. 

Supervision of Indians will include all charges formerly included under 
agency, except those mentioned in the special classes following. 

Education will include ail charges for education of Indian pupils, except 
health items. 

Health will include all charges in connection with health, such as salaries 
of physicians, nurses, and hospital attendants, purchase of medical and hospital 
supplies, construction of hospital buildings and sanatoriums. 

Agriculture and stock will include salaries and expenses of farmers and stock- 
men, cost of equipment and supplies used by them, and live stock purchased for 
breeding purposes. 

Allotments will include all charges in connection with allotment work. 

Irrigation will include all charges in connection with construction, opera- 
tion, and maintenance of irrigation works. 

Forestry will include all charges in connection with the care and preservation 
of timber. 

The act further provides that each activity be subdivided so as to show 
amounts for current expenses, upkeep of buildings and property, new construc- 
tion and equipment; and for other expenses. 

Current expenses will include ail items for the ordinary conduct of a school 
or agency not falling within the other three classes. 

Upkeep of buildings and property will include all charges for labor and 
material in connection with the repairs of buildings and permanent school or 
agency plant. 

New construction and equipment will include construction of new buildings 
and permanent improvements, and purchase of new equipment. Equipment will 
include all nonexpendable property. The cost of all power-driven machinery 
installed in buildings and all appliances and equipment permanently attached 
to buildings will be included under appropriation for buildings. The cost of 
hand tools used in connection with building construction and repairs, such as 
pipe cutters, stocks and dies, carpenter tools, etc., is not chargeable to building 
appropriations, but will be charged to appropriate support funds. 

Other expenses will include expenditures of an unusual nature, such as per 
capita payments to Indians, purchase of animals, agricultural implements, etc., 
for Indians, payable from reimbursable appropriations, and other expenditures 
of this general character. 

In the column headed " Salaries and wages " should be included the esti- 
mated amount for all labor, regular and irregular, except labor in lieu of 
rations, which should be included in column headed "Miscellaneous" and item 
explained in justification. 

In the column headed " Heat, light, and power service " charge for service 
only should be entered, not the cost of fuel. 

In estimating for construction of new buildings, the estimated cost for labor 
and material for each building should be shown separately in the justification. 

Estimates should be submitted in units of dollars, cents being omitted. 

These estimates must be prepared in quintuplicate and returned to the 
Indian Office in time to be received not later than August 1, 1913, as they are 
required for use in making up the estimates for appropriations required by 
the Secretary of the Interior to be submitted to the department early in Sep- 
tember. This does not take the place of the annual estimate blanks which are 
to follow. 

EXAMINATION OF ESTIMATES AT CENTRAL OEFICE. 

Each disbursing officer prepares as many "estimates" forms as 
there are appropriation accounts provided for his use. And in case 
there are several activities maintained from one appropriation, then 
he segregates the appropriation estimate in such manner as to show 
the amount for each activity affected. The estimates, when received 
in the Office of Indian Affairs from the different disbursing officers, 
are sorted according to appropriation accounts; that is, the esti- 
mates from all agencies for a single appropriation are brought to- 
gether. Then, depending upon the nature of the estimates, they 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 27 

are distributed for administrative examination among the appro- 
priate divisions of the Office of Indian Affairs — for example, the 
estimates for surveying, irrigation, and the like, which are received 
from all agencies are referred to the Land Division. The estimates 
having to do with all activities of the service connected with the 
supervision of Indians, education, and in fact all other estimates of 
need not specially allotted to other divisions of the Office of Indian 
Affairs, are transmitted to the Education Division for administra- 
tive examination. 

Invariably the estimates are reduced in these central divisions. 
In some instances the reduction is as great as 50 per cent. It is 
common practice, therefore, for disbursing officers to overestimate 
their needs in anticipation of a reduction. 

In making adjustments in the estimates the various divisions con- 
sult the financial tables which show the expenditures of the previous 
year for the same appropriation accounts. Although great em- 
phasis is laid upon personal knowledge of conditions at the different 
reservations, statistical data are consulted. Special inquiries are 
made occasionally to test the statements which accompany each item 
in the estimates. Frequently it seems advisable to reduce the total 
of the estimates of all disbursing officers applying for funds under 
a specific appropriation to an amount which was allowed by Con- 
gress in the previous year's appropriation bill. Such cuts are made 
because it seems to be a common understanding that if an appropria- 
tion of the same amount is requested little opposition will be raised. 
It frequently happens, therefore, that the estimate of needs is not 
examined as to individual items therein, but as to the total of all 
estimates under the same appropriation, with the idea that subse- 
quently an adjustment satisfactory to the different disbursing officers 
can be effected. 

APPROVAL BEFORE PRESENTATION TO CONGRESS. 

Following the administrative examination the various estimates 
for appropriations are assembled and transmitted to the law clerk 
of the Indian Office for preparation in order of the items in the 
Indian bill. The law clerk in turn transmits the proposed bill to 
the commissioner for approval. Upon review the commissioner 
may deem it advisable to make transfers, adjustments, and changes; 
more frequently, however, after familiarizing himself with the esti- 
mate as submitted, he transmits it to the Secretary of the Interior. 
The Secretary of the Interior, after giving to the estimate as sub- 
mitted to him such attention as may seem necessary, transmits it to 
the Secretary of the Treasury, who in turn sends it to Congress. 
When received by Congress the proposed bill is referred to the Com- 
mittee on Indian Affairs of the House of Representatives for con- 
sideration and examination. As a matter of fact, the estimates at 
times are reviewed by the Committee on Indian Affairs before Con- 
gress meets, preparatory to such customary reference. 

ACTION TAKEN BY COMMITTEE ON INDIAN AFFAIRS. 

Upon receipt of the annual estimate the House Committee on 
Indian Affairs institutes hearings. At these hearings testimony is 
taken from commissioners, their deputi?s, chiefs of divisions, ex- 



28 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

aminers, investigators, disbursing officers, agents, and others for the 
purpose of determining whether the estimate as submitted, in the 
opinion of Members, represents the needs as stated. From time to 
time the committee requests the Office of Indian Affairs to supply 
to it supplementary statements on different matters of a financial 
nature. The committee endeavors to satisfy itself as to the pro- 
priety of each proposed appropriation item. 

After the hearings the congressional committee prepares an ap- 
propriation bill which materially modifies the estimates or requests 
for appropriations as originally presented. In some instances cer- 
tain appropriations asked for are entirely wiped out, others are cut 
50 per cent or more, others are left intact, others may be increased 
as a result of the showing made by subordinates in the office or in 
answer to official pressure. The House Committee on Indian Affairs 
reports its bill on the floor, after which it may be modified in either 
branch. Finally passed and signed by the President, the appropria- 
tion becomes law governing the Indian Office for the next fiscal year. 

APPORTIONMENT OF ITEMS OF APPROPRIATION. 

The Indian appropriation act contains many items or amounts 
which are for use for some particular activity or function in all 
agencies and schools. For example, an appropriation item may be 
" Pay of Indian police " or " Industrial work and care of timber," 
or " Pay of judges, Indian court." These items must be appor- 
tioned over the various agencies and schools, and it becomes the duty 
of the board of estimate and apportionment to do this work. The 
procedure followed by this board is to adjust, cut, and rearrange the 
amounts submitted by the disbursing officers in their original esti- 
mates to such figures and amounts the sum total of which will not 
exceed the amount of the appropriation item passed by Congress. 

The original estimates of needs are the main guide of the board 
of estimate and apportionment, which also avails itself of informa- 
tion which was previously used by the different divisions of the 
Office of Indian Affairs in establishing the original amounts for the 
proposed appropriation bill to be submitted to Congress. The board 
again reviews the disbursing officers' " justification," statistical data 
contained in annual reports and similar data, financial statements of 
expenditures for the preceding year, and any other data at hand at 
that time. It is purely a matter of discretion with the board how 
much each disbursing officer shall be allowed or. using its language, 
" allotted." 

Experience has shown it to be wise for the Office of Indian Affairs 
to retain a certain portion of each appropriation amount in the form 
of a reserve in order to meet unforeseen expenditures of an emergency 
character, or expenditures which accrue through a change of policy, 
inadequacy of an estimate or allotment, a change in prices, an in- 
crease in labor requirements, a violation of contract, or any other 
matter of a similar character which would have a tendencj 7 to in- 
crease the amount to be expended. In some instances this reserve 
amounts to only 2 per cent or 3 per cent of the total appropriation, 
while in others it may be as high as 15 per cent or 20 per cent. It 
would be a fair statement to say that on the average a reserve of 10 
per cent is set aside. 




BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 29 
ANNUAL CONTRACTS AGAINST APPROPRIATIONS. 



Because of the amount of time consumed by the procedure out- 
lined in the foregoing, in a great many instances it becomes necessary 
for the Office of Indian Affairs to let contracts for supplies, ma- 
terials, and equipment before the appropriation act becomes elf ective. 
It receives bids, selects the successful bidder, draws up a contract 
with all qualifications and stipulations as to delivery, price, quantity, 
etc., with the proviso that this contract will hold good if the neces- 
sary amount is appropriated by Congress to cover the contract. 

After it has taken account of all encumbrances and all special 
requests, bearing in mind the importance of the justification, etc., 
the "board of apportionment" prepares a statement of allotment, 
which shows the exact amount that each disbursing officer is allowed 
from each appropriation, against which he may make requests for 
the issue of " authorities " for the purchase of specific services or 
supplies. 

NOTICES OF ALLOTMENT. 

As notice of allotment the Commissioner of Indian Affairs trans- 
mits to each disbursing officer a copy of the original estimate 
changed to conform to his final allotments. This copy, therefore, 
not only serves as a notice of allotment, but also shows how much the 
estimate was reduced. Having performed this service, the "board 
of apportionment " ceases to exist for the year. When further allot- 
ments have to be made from the reserve, it is done by the officers of 
the Office of Indian Affairs. 



CHAPTER IV. 

Preparation of the Annual Estimates of Revenues and Receipts. 

The nature of the item of moneys received determines its grouping 
under one of the following main classifications: 

(a) Income on the funds of the several Indian tribes. 

(b) Miscellaneous receipts. 

(c) Individual Indian moneys. 

(d) Special deposits. 

INCOME ON FUNDS OF THE SEVERAL INDIAN TRIBES. 

What is called income of the several Indian tribes consists of the 
accruals to amounts held in trust or due to tribes under treaty and 
other agreements. Part of these accruals do not pass through the 
accounts of disbursing agents, but are taken up directly on the books 
of the Treasury. Some of these may be exactly estimated and others 
may not. For example, a tribe has a trust fund in the Treasury 
which bears interest at a fixed rate per annum. In this and similar 
cases the annual income for the next year can be estimated exactly. 
If, however, the trust fund is in process of proration to members of 
the tribe, under the provisions of the act of March 2, 1907, or if the 



74564—15 3 



30 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

trust fund is being increased by receipts from the sale of land, etc., 
the annual income will vary according to the deposits or withdrawals 
and the income can not be exactly estimated in advance. 

MISCELLANEOUS RECEIPTS. 

All items of revenue which come into the hands of disbursing 
officers from miscellaneous sources are classed as miscellaneous re- 
ceipts. In accordance with the act of July 1, 1898, each Indian agent 
must account for all funds coming into his hands as custodian from 
any source whatever and be responsible therefor under his bond. In 
an order issued by the Commissioner of Indian Affairs and approved 
by the Secretary of the Interior on June 14, 1910, disbursing agents 
nre instructed to report all miscellaneous receipts in accordance with 
a definite classification. This classification, as modified by order of 
.November 20. 1913, is made up of Classes I to V, inclusive, as follows: 

Class I. — Into Class I fall all net receipts which must be sent to 
the Treasury and which are not available for expenditure by the dis- 
bursing officer. What is meant by " net " receipts is the total amount 
received less the necessary expenses and sales which are authorized 
to be paid from these receipts. The eight sources of these receipts 
are : 

1. Sale or rent of buildings erected from gratuity appropriations. 

2. Sale of any property purchased from gratuity appropriations. 

3. Sale of any property purchased from appropriations or funds 
which can not now be ascertained. 

4. Sales of hides from stock purchased from gratuity appropria- 
tions for breeding or dairy purposes or for subsistence of pupils. 

5. Transportation charges added to price of subsistence supplies 
sold. 

6. Rent of water from agency or school, water or irrigation sys- 
tem. 

7. Payment by transportation companies for goods lost in transit 
which were purchased from gratuity appropriations. 

8. Fees collected for heirship hearings under the act of June 30, 
1913 (38 Stat. L., 80). 

Class II. — Into Class II fall all net receipts in the nature of reim- 
bursement of appropriations which are available for reexpenditure 
for the purposes of the original appropriation. To arrive at the net 
amount to be so credited the necessary expense of sales, if authorized, 
may be paid from the total received. The eight sources of these 
receipts are: 

1. Sale of buildings erected from tribal funds. 

2. Sale of any property purchased from tribal funds. 

3. Sale of hides from stock purchased from tribal funds. 

4. Sale of hides from stock purchased from gratuity appropria- 
tions for subsistence of Indians other than pupils. 

5. Eefunds of overpayments from any appropriations. 

6. Payments by transportation companies for goods lost in transit 
which were purchased from tribal funds. 

7. Tuition fees paid for white children enrolled in Indian schools 
under the acts of March 1, 1907 (34 Stat. L., 1018), and March 3, 
1909 (35 Stat. L., 783). 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 31 

8. Amounts received in payment for implements, stock, etc., sold 
to Indians under reimbursable agreements. 

_ Class III . — Into Class III fall all amounts received under the pro- 
visions of the act approved March 3, 1887, and which are accounted 
for as proceeds of labor of the Indians outside of schools, and used 
for the benefit of one or another of the several tribes. This is in the 
nature of a discretionary fund. The Secretary of the Interior is 
authorized to use this money in such manner and for such purposes 
as in his judgment seem best. He is required to submit to Congress 
annually a detailed report of moneys received and the uses to which 
they were put. The necessary expenditures for labor, sale, collec- 
tion, etc, may be paid from these receipts. There also exists a gen- 
eral authority which confers on all disbursing agents the right to 
sell the products of tribal lands. These are shown below as items 3, 
4, and 5 in this class. The eleven sources of these receipts are : 

1. Sale of timber cut from tribal lands. 

2. Sale of town lots and other tribal lands under special acts of 
Congress. 

3. Sale of lumber manufactured at agency mills from timber cut 
on tribal lands except at the Menomonee Mills. 

4. Sale of any other products of tribal lands which are not the re- 
sult of labor of individual Indians. 

5. Sale of any property purchased from Class III funds or " In* 
dian moneys, proceeds of labor " belonging to Indians. 

6. Rent of buildings erected from tribal funds. 

7. Leasing of tribal lands. 

8. Grazing on tribal lands. 

9. Trespass on tribal lands. 

10. Eights of way on tribal lands. 

11. Royalties on coal, oil, gas, and asphalt from tribal lands. 
Class IV. — Into Class IV fall all receipts such as the proceeds of 

the sales of products of schools and all other amounts obtained other- 
wise than by appropriation, which are to be expended for the bene- 
fit of such agency or school where the things sold are produced. 
There exists a general authority which confers on disbursing officers 
the right to sell the products of the agencies and schools enumerated 
under this class at such time and in such manner as they may think 
best. They are permitted to make expenditures from these receipts 
before they are deposited in the Treasury for any legitimate purpose 
which will benefit the agency or school producing these receipts. 
After the receipts have been deposited in the Treasury, they are car- 
ried on the books of the Indian Office under the caption "Indian 
moneys, proceeds of labor — agency " or " Indian moneys, proceeds of 
labor — schools," depending upon the source. This distinguishes 
them from the moneys received in Class III, which are designated 
as " Indian moneys, proceeds of labor — Indians." There is one re- 
striction which causes a division of the account indicated, viz, that 
receipts from " agencies " can not be used for " school " purposes, 
and receipts from schools can not be used for " agency " purposes. 
All articles purchased with these moneys are regarded as Govern- 
ment property and must be accounted for as such. The 10 sources of 
these receipts are : 

1. Sale of property purchased from Class IV funds or "Indian 
money, proceeds of labor," belonging to agencies. 



32 



BUSINESS AND ACCOUNTING METHODS INDIAN BUKEAU. 



2. Sale of property purchased from Class IV funds or "Indian 
moneys, proceeds of labor," belonging to schools. 

3. Sale of agency products. 

4. Sale of school products other than those mentioned in para- 
graph 10. 

5. Sale of hides from stock produced at agencies. 

6. Sale of hides from stock produced at schools. 

7. Pasturage on agency lands. 

8. Pasturage on school lands. 

9. Fines imposed by courts of Indian offenses. 

10. School entertainments, band concerts, athletic contests, sale of 
curios or of fancy articles manufactured by pupils, subscriptions to 
school journals or advertising therein, job printing, or any other 
like enterprise. 

Class V. — Into Class V fall all receipts which are collected in fees 
to pay for advertising the sale of Indian allotments. When the 
receipts are deposited in the Treasury they are carried on the books 
of the Office of Indian Affairs under the caption of " Indian moneys, 
proceeds of labor — advertising." These receipts may be expended 
by disbursing officers for purposes for which they are collected, but 
for no other purpose, and they need not be deposited in the Treasury 
except as specially provided. The designation of these receipts on 
the report is, " Fees collected to pay for advertising the sale of 
Indian allotments." 

INDIVIDUAL INDIAN 3IOXEYS. 

In addition to the miscellaneous receipts just enumerated under 
the five different classes, the disbursing agents collect moneys known 
as " individual Indian mone}^s." These represent funds, regardless 
of their derivation, which belong to individual Indians, that come 
into the custody of the disbursing officers. The eight sources of these 
receipts are: 

1. Sale of Indian allotments. 

2. Sale of timber cut on Indian allotments. 

3. Eental of Indian allotments for agricultural purposes. 

4. Eental of Indian allotments for mining purposes. 

5. Royalties on minerals from Indian allotments. 

6. Earnings of school pupils or money received from any source 
for delivery to them. 

7. Miscellaneous individual Indian moneys. 

8. Interest on bank accounts. 

SPECIAL DEPOSITS. 

Still another group of receipts which fall within the hands of dis- 
bursing officers is designated as " special deposits." These special 
deposits are moneys received as guaranty of good faith in proposed 
transactions between third persons and individual Indians. They 
represent deposits accompanying bids for the purchase of allotments 
of land, deposits to insure payment of damages in consequence of 
rights of way across allotments, etc. The five sources of these re- 
ceipts are: 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



33 



1. Deposits with bids for lands belonging to individual Indians. 

2. Deposits with bids for timber, etc., from lands belonging to 
Individual Indians. 

3. Guaranty deposits for right-of-way damages (individual In- 
dian). 

4. Guaranty deposits for right-of-way damages (tribal). 

5. Deposits with bids for timber or other products of tribal lands. 



CHAPTER V. 

Issuing Authorities to Spend Money. 

In the Indian Service three official acts are necessary to authorize 
an expenditure — 

1 . An appropriation must be made. 

2. The appropriation must be allotted. 

3. The agent must obtain specific authority to expend. 

The methods incident to making the annual appropriations and 
the allotments have already been described. It remains to describe 
the issuing of authorities to agents to expend the amounts which have 
been appropriated and allotted. 

DEFINITION AND USE OF AUTHORITIES. 

An " appropriation " is an authorization by Congress to the Sec- 
retary of the Interior to expend an amount for a designated function 
or purpose. An " allotment " is an authority by the Secretary of the 
Interior or Commissioner of Indian Affairs to spend a certain amount 
of each appropriation at a particular agency for the designated pur- 
pose. An " authority " is a grant given by a superior officer to a 
particular Indian agent, to expend money from a specific allotment. 

Authorities serve the purpose of providing a means whereby the 
Office of Indian Affairs may be kept currently informed of purchases 
and expenditures made, or to be made, in the field or through issue 
from warehouses. They are purely adminitsrative in their signifi- 
cance. All authorities group themselves into one of three classes : 

Authorities A. 

Authorities B. 

Authorities C. 

Authorities "A" and " B " cover grants to disbursing officers to 
expend money or ratify expenditures already made pursuant to gen- 
eral orders. Authorities " C " cover purchases to be made through 
the Office of Indian Affairs, warehouses, or upon open market order, 
payment for which is to be made by claim through the Office of 
Indian Affairs. Disbursing officers may not expend money under 
authorities " C." 

REQUESTS FOR AUTHORITIES BY DISBURSING OFFICERS. 

Authorities "A" are issued on request of a disbursing officer for 
authority to expend money from funds " allotted " to the agency or 
school under his jurisdiction. 



34 BUSINESS AXD ACCOUNTING METHODS INDIAN BUREAU. 



Authorities " B " are issued on request of a disbursing officer for 
approval of expenditures already made from funds " allotted " to the 
agency or school under his jurisdiction. The expenditures thus to be 
ratified are made to meet emergencies. No " authorities " are re- 
quired for expenditures of " receipts " which are not " allotted." 

FORM OF REQUEST EOR AUTHORITY. 

When a disbursing officer wishes to expend money for a purpose 
which falls within those for which the various appropriation amounts 
allotted to him can be used he prepares a " request " on a form pro- 
vided for that purpose. It is drawn in duplicate, and the original 
is forwarded to the division of finance of the Office of Indian Affairs. 

It is printed on a sheet 8 by 10J inches, with heading printed as 
follows : 

Department of the Inteeior, 
United States Indian Service, 



, 191—. 

The Commissioner of Indian Affairs, 

Washington, D. C. 

Sir: Authority is respectfully requested to expeud, during the fiscal year 
191 — , the sum of $ from the appropriation. 



(1) 

(2) 

(3) 

(4) 

for the following 



Do not write in 
this space. 



Beneath this heading the following columns are provided: 

Object. 
Unit price. 
Amount. 

At the lower left corner of the form provision is made for the 
entry of the date and amount of the authority. At the lower right 
corner provision is made for the disbursing officer's signature. If a 
form is not available the disbursing officer's request may be made by 
letter, or by wire if quick action is important. The request, letter, 
or wire is received by the mails and files division, with the various 
necessary "transfer slips" attached, which indicate the routing of 
the documents. When it is so prepared, it is transferred to the 
finance division for the attention of the clerk in charge of issuing 
authorities. 

EXAMINATION OF REQUESTS FOR AUTHORITIES. 

The three forms — " the request for authority," the " designation of 
fund memorandum," and the " transfer slip " are referred to the 
bookkeeper, who has charge of the account in question. He examines 
the request and designates the fund against which, in his judgment, 
the proposed expenditure should be charged, if approved. If the 
fund has been already designated on the request for authority by 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 35 



the disbursing officer, he signifies his approval by marking on 
the " designation of fund memorandum " " O. K." The bookkeeper 
returns the request form to the chief clerk in charge, who examines 
the designation of fund on the memorandum and, if he agrees, 
initials it and transfers the request and the other papers attached 
thereto to the education division for administrative action. From 
information at hand, either in the files or through personal knowl- 
edge, this division is presumed to be in a position to pass upon the 
need for the expenditure requested. As a result, its approval or dis- 
approval, or even modification, constitutes ground sufficient for 
further steps in the preparation of the authority by the finance 
division. In some instances, where these authorities involve large 
sums of money and cover especially important matters, at this stage 
other divisions are consulted, or the matter may even be referred to the 
commissioner. In most instances, however, requests are passed upon 
by the education division, without reference to other divisions, and 
come to the notice of the commissioner only after the regular pro- 
cedure has been complied with. The education division returns all 
papers connected with the case, with its approval or disapproval, to 
the finance division. 



PREPARATION OF AUTHORITIES. 



The chief clerk in charge of authorities examines the request and 
its approval by the education division, and, if he notes no flaws 
therein, refers the matter to the clerk, who prepares, in triplicate, 
authority "A" or authority " B " from the approved requisition. 
This form consists of a sheet 8 by 10J. At the top of the form the 
following heading appears: 

Department of the Interior. 

Office of Indian Affairs, 

Washington, D. G, 

authority. 

Authority is hereby granted for you to expend, during the fiscal year 191 — , 
the sum of $ from the appropriation. 

(1) _ — $ $ __ 

(2) $ $ 

(3) _ $_ — $ * 

(4) L, JL________ — - — — $ _ — 

for the following: 



Beneath this heading special columns are provided for the par* 
ticulars as follows : 

Object. 

Unit price. 
Amount. 

Beneath these columns, in the lower right corner, provision is made 
f or the initials of the employee handling the forms for the entry of 
the amount and also for the signature of the acting commissioner. 



36 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

At the bottom of this form, in the left corner, appear blank lines as 
follows : 

To: 



(Title of name.) 



(School.) 



(Post office.) 

In a number of instances the authority form has been typed in its 
required detail by the disbursing officer in the field and has been 
transmitted to the finance division at the time when the request for 
an authority was made. When this is the case, the chief of the sec- 
tion in charge of authorities does not refer the requisition to the 
clerk, but verifies the correctness of the statement and transmits all 
papers to the bookkeeper in charge of the " liability ledger," as is 
done regularly with all other authorities after they have been 
handled according to the procedure described in the foregoing. 

RECORDING OF AUTHORITIES. 

Upon receipt of authorities, the bookkeeper in charge of the 
"liability ledger" makes an entry in different columns, depending 
upon the nature of the authority. If it is to cover an annual esti- 
mate for supplies which have been acted on prior to allotment, it is 
entered in the column under the heading " annual contract charges ; " 
if it is to be charged against the original apportionment, it is entered 
in the column under the heading " charges — regular apportionment." 
After such entry the ledger clerk places his initials in a space pro- 
vided on the authority in the lower right corner and returns all 
papers to the clerk in charge of issuing authorities. That clerk then 
initials the authority, after he has determined that it is properly 
awarded and has again checked the appropriation against which it 
is issued. 

FIXAL APPROVAL OF AUTHORITIES. 

If the authority embraces the expenditure of more than $500, it 
is stamped with a certificate to be signed by the assistant secretary. 
If it is for an amount of $500 or less, it is stamped with a certificate 
to be signed by the Acting Commissioner of Indian Affairs. The 
papers are then ready for transmittal and further approval. 

The Chief of the Finance Division next examines them and initials 
them if he finds everything to be correct. Frequently it occurs at 
this point that the Chief of the Finance Division does not agree with 
the designation of fund. In case he makes a change and the author- 
ity has again to pass through the procedure of registration, prepara- 
tion, etc. a change has to be made on the liability ledger, an appro- 
priate entry is made under the appropriation account which the 
Chief of the Finance Division designates. If the authority is to be 
signed by the Assistant Secretary, it is then transmitted to the com- 
missioner, who initials it and transmits it to the Assissant Secretary. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



37 



FINAL DISPOSITION OF PAPERS. 

After proper approval has been obtained the first and third copies 
of the authority are sent to the disbursing officer along with in- 
closures and tags attached by the Mails and Files Division. The 
second copy of the authority is returned to the chief clerk of the 
Finance Division in charge of authorities, who instructs a clerk to 
prepare a file record from it. It is then used to check entries made 
against the various appropriation accounts and to note whether the 
authority has been properly approved and has passed all stages of 
the procedure. The request for authority is transmitted to the Mails 
and Files Division, where it remains. The second copy of the author- 
ity is placed in the files of the Finance Division. 

RECORD OF AMOUNTS EXPENDED KEPT ON EACH AUTHORITY. 

If it be an "A" authority, the copy is attached to a sheet 8 by 10J 
inches. At the top of this sheet the following form is printed : 

Examiner: , 1 Qr. ; 2 Qr. ; , 3 Qr. ; , 4 Qr. 

Authority No. , dated , 19— ; $ 

(Original filed with voucher No. , quarter, 18__.) 

Jn sheets— Sheet No. ; $ 

For Agency — School — Police — Field — Matron, 

(Draw pen through those which do not apply.) 
Appropriation : 



Beneath this head appear eight columnar ruled spaces headed 
u To be Expended for." In these spaces are to be entered the various 
authorities, modifications, etc., of these authorities, under that spe- 
cific appropriation. Beneath this column ruled off with a double 
line, are columnar rulings with the following headings : 

Qr. 

Vo. 

Items. 

Amount. 

This space is provided for the purpose of recording expenditures 
which were made under these authorities by disbursing officers. 
These entries are made upon receipt of the quarterly accounts in 
the account section of the Finance Division. 

RECORD OF " B " AUTHORITIES. 

Since " B " authorities are issued to ratify expenditures already 
made because of their emergency character, the copy of a " B " 
authority is attached to a form headed "Authorities Expended." 
This form is 8 by 10£ inches in dimension, and at the top of the 
form the following is to be found : 

AUTHORITIES EXPENDED 



Al 



38 



BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 



Columnar rulings provide for the following headings: 

Authority No. 

Date. 

Amount. 

Voucher. 

Quarter. 

Examiner. 

This constitutes a record for the Finance Division when it is 
necessary to refer to authorities granted and passed. 

DELAYS AND LOST PAPERS. 

It frequently happens that there are delays in the course of ap- 
proval. These delays may be prompted by many causes, as a desire 
to get additional information on the request, or a difference of 
opinion as to the advisability of performing the work in the manner 
specified in the authority. In such instances the authority may re- 
main unapproved for a considerable length of time, and it frequently 
happens that the second copy of the authority does not reach the 
Finance Division. This sometimes happens with authorities that 
have not been approved, as well as with those that have received ap- 
proval. As a result, the Finance Division is unable to check its 
entries and prepare its file. When the authority goes astray the file 
record is prepared from the memorandum entries in the liability 
ledger. When the authority has not been granted and the second 
copy is lost in the path of procedure, the liability ledgers remain en- 
cumbered with the authority, supposedly granted, and not until an 
error of some kind directs the bookkeeper's attention to this specific 
account will the incorrectness of the entry be made known. 

WAREHOUSE EXPENDITURES. 

Requests for "C" authorities from disbursing officers are received 
by the Finance Division. These requests cover purchases to be made 
in open market by disbursing officers or by the superintendents of 
warehouses for Indian supplies. Upon receipt of this request in the 
Finance Division it is examined as to the amount available. If the 
amount asked is available, the authority to "purchase in open 
market " or 44 order under contract " as the case may be, is made up in 
duplicate. The original is forw T arded to the superintendent of the 
warehouse for Indian supplies at the city where the warehouse is 
located. The duplicate is retained in the office of the Finance Divi- 
sion and entered in the proper columns of the liability ledger, as is 
done with other authorities. 

A 44 C " authority is printed on a sheet 8 by lOJ inches, and reads 
as follows: 

Department of the Interior, 

Office of Indian Affairs, 

Washington. 

The Superintendent Warehouse for Indian Supplies, 



Sir: You are requested to order under contract or purchase in open market 

and send immediately to the superintendent of the School, for the use 

of , the following: 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 39 



Beneath this heading space is provided for the description of 
articles and amount. At the bottom of the above particulars appears 
the following: 

The total cost of the foregoing is estimated to be $ . not exceeding which 

sum will be paid through the Indian Office from the- appropriation ; 

for quotations see your letter of , 191 — . . 

At the bottom of this form provision is made for the signature of 
the second assistant commissioner. 

The copy is retained in the files of the Finance Division, with the 
original request. The superintendent of the warehouse for Indian 
supplies, upon receipt of authority, makes the purchases in open 
market and ships to the superintendent. 



CHAPTEE VI. 

Requisitions for Funds by Disbursing Officers. 

The regulations of the Indian Office require that public funds of 
all classes, no matter from what sources they are received, must be 
immediately taken up in the disbursing officers' accounts. 'No ex- 
penditures whatsoever may be made therefrom except under an 
authority from the office. Emergency expenditures are exceptions to 
the above. 

REQUISITIONS FOR EXPENDITURES OF PUBLIC FUNDS. 

The fact that a disbursing officer has had allotted to him a certain 
amount of money for use under a given appropriation does not 
entitle him to make expenditures therefrom. Before so doing he 
must obtain through channels of due procedure an authority for the 
expenditure of funds and obtain a transfer of funds from the Gen- 
eral Treasury fund to his official credit for this purpose. The requisi- 
tion which the disbursing officer makes for funds to be placed to his 
credit for expenditure is made by him either by letter, on a special 
form, telegram, or verbally. In all instances the request serves 
simply as a means of bringing to the attention of the home office 
that the disbursing officer requires funds. The requests are received 
by the Mails and Files Division and after due and proper transfer 
slips have been attached and other routine procedure complied with, 
the requests for funds reach the Finance Division, where they are 
referred to a clerk in charge of this work. 

VERIFICATION AND CHECKING OF REQUESTS. 

It becomes the duty of the clerk in charge of preparation of re- 
quests for the transfer of funds to carefully examine and verify the 
request. Under the regulations of the Office of Indian Affairs the 
clerk is not permitted to make a cash advance in excess of the dis- 
bursing officer's bond. He further is obliged to ascertain the cash 
balance on hand at the time of the last accounting made by the dis- 
bursing officer. This he obtains from a card record maintained for 
this purpose. He is guided mainly by these two restrictions. Fur- 



40 BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 

ther, he takes into consideration the condition of the appropriation 
as it stands on the date when the request for funds is made. He 
consults the liability ledger and, if possible, tries to ascertain 
whether an authority was specifically granted for the purpose for 
which funds are requested. If no specific authority has been 
granted he takes into account authorities granted under this specific 
appropriation and compares the total of these authorities with the 
amount allotted the officer making the request under this appropria- 
tion. 

In instances where the liability ledger shows a small available 
balance the clerk establishes the further fact of refunds. Eefunds 
are occasionally not recorded in the liability ledger, and the clerk, 
therefore, consults the appropriation ledger, in which a very careful 
record is made of refunds. If the appropriation ledger shows that 
sufficient money is on hand under this appropriation to grant the 
disbursing officer the advance requested, he O. K's the request, but 
in no instance is he supposed to approve a request in excess of the 
amount apportioned the disbursing officer under the appropriation. 

It is quite often impossible for the clerk to ascertain the exact 
authority against which a cash advance is to be made unless he 
scrutinizes each authority and the purposes for which it is issued. 
If there is something which arouses the suspicion of the clerk, still 
he would be justified in passing a request, provided the cash already 
advanced on previous dates did not exceed the total of authorities 
granted. 

PROCEDURE PRIOR TO THE SIGNING OF THE WARRANT. 

After the examination has been made the clerk hands all forms 

and memoranda to a typist, who prepares one yellow copy and three 
white copies. After typing, the copies are returned to the clerk, who 
checks their accuracy. From the yellow copy an entry is made in 
the liability ledger under the proper appropriation account into the 
column "warrants issued," although actually the warrant will not 
be issued for at least six days, which is the time required to complete 
the procedure of issuing warrants. Entry having been made in the 
liability ledger from the yellow copy, it is transmitted to the dis- 
bursing officer and serves as his notice that a request for funds has 
been instituted and is in process of preparation. The third copy of 
the white form remains in the office as an office record and is re- 
ferred to by examiners of accounts when they make their audit. 
The first and second copies of the white form are transmitted first 
to the Chief of the Finance Division for purposes of examination 
and initialing. From there they are referred to the acting commis- 
sioner for examination and signature, who in turn refers both copies 
to the chief disbursing officer. The chief disbursing officer retains 
the second copy, initials the first, and transmits it to the Assistant 
Secretary for signature. 

The first copy is referred back to the chief disbursing officer who 
transmits it to the Auditor for the Interior Department for approval. 
After the auditor has made his examination, he transmits the request 
to the clerk of the Division of Bookkeeping and Warrants, where a 
warrant is prepared and three copies of a transcript of details of the 
requisition are made on loose-leaf ledger sheets. The requisition is 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU, 41 

attached to the warrant and the three transcripts. The requisition 
with the attached papers is then transmitted to the chief of the 
Division of Bookkeeping and Warrants who inspects and examines 
all papers. After the prescribed procedure in the Treasury Depart- 
ment has been complied with the warrant is signed and notice is 
sent to the requisition clerk of the Indian Office that funds have been 
placed to the credit of the disbursing officer making the request. 

TREATMENT OF ERRORS DISCLOSED. 

If an error is discovered at any point in the procedure before the 
request reaches the Secretary of the Interior, the requisition is re- 
turned to the Finance Division of the Office of Indian Affairs and 
changes are made either in the fund account or in the requisition^ 
but if a flaw is discovered either by the auditor or any other official 
after the Secretary of the Interior has signed and approved the 
requisition, the amount of the requisition remains fixed. Thereafter 
no one has the authority to change the total of the requisition. If, 
for example, it is found that one of the appropriations does not have 
sufficient funds to cover the amount requested, due to a discrepancy 
between the Treasury records and those of the Indian Office, it be- 
comes necessary to return the requisition and effect a transfer be- 
tween two appropriations in such manner that the total of the requi- 
sition is not changed. In all instances where such a change or one 
similar is effected, the requisition clerk is required to make a change 
in the liability ledgers and notify the chief disbursing officer of the 
adjustment. If there is a flaw which is discovered subsequent to the 
Secretary of the Interior's signature which can not be rectified be- 
cause no other appropriations are applicable, the requisition must be 
canceled by following the same course it originally had to take, only 
in reverse order. 



CHAPTEE VII. 

General Description of the Principal Kecords of Accounts 
Kept in the Indian Office. 

The principal records of account kept in the Indian Office by 
means of which information is currently produced are the following : 

1. Appropriation and fund ledgers (Treasury accounts). 

2. Appropriation and allotment ledger (apportionment ledger). 

3. Allotment and encumbrance ledgers (liability ledger). 

4. Cost ledgers. 

The character of information produced by each is discussed below. 

APPROPRIATION AND FUND LEDGERS. 

The appropriation and fund ledgers serve the purpose of recording 
each item appropriated by Congress and each trust fund as a sepa- 
rate account. Against each account are charged the advances of 
cash from the Treasury for use of disbursing officers and other rep- 
resentatives of the Office of Indian Affairs. The entries in the 
appropriation ledgers are of cash transactions. They do not show 



42 BUSINESS AND ACCOUNTING METHuDS INDIAN BUREAU. 



encumbrances — they only provide a record of cash received and 
advanced by the Treasury, including transfers between appropri- 
ation accounts and such refunds as the disbursing officers have re- 
turned to the Treasury Department — largely made up of amounts 
of authorities not required for the purchase of a given supply or 
service, and amounts not used because the materials and supplies 
authorized were not bought. The accounts in the appropriation and 
fund ledgers are, with a few minor exceptions, an exact transcript 
of those of the Treasury. They divide themselves into six groups: 

(a) Trust-fund ledgers. 
(&) Support ledgers. 

(c) School ledgers. 

(d) Miscellaneous ledgers. 

(e) Indian moneys ledgers. 
(/) Treaty ledgers. 

TRUST-FUND LEDGERS. 

The trust-fund accounts are contained in ledgers kept in the 
Finance Division in a loose-leaf form and cover Indian trust funds 
of all tribes, a page or more being used for each tribe. The form 
consists of a sheet 18J by 16 inches, printed broadside. In the 
upper right corner of the sheet provision is made for the entry of the 
appropriation number and the sheet number. Below these the title 
of the fund is entered. 

Beneath this heading the page is divided vertically into two divi- 
sions — the left for debits, the right for credits. In the left division 
the following columns are provided : 

Date. 

Items. 

Number. 

Principal. 

Interest. 

The entries made on the debit side are derived from " requisitions 
of disbursing officers, claims, and transfer warrants." 
The right division is provided with columns as follows : 

Date. 

Items. 

Number. 

Principal. 

Interest. 

The entries in these columns are derived from " warrants " issued 
by the Treasury, based on treaties and agreements with Indians for 
the cession of their lands, sales of timber, etc., and interest on the 
trust fund; also from transfers and from Treasury statements of 
refunds by disbursing officers of unexpended balances. If an unex- 
pended balance remains at the end of the fiscal year it is carried for- 
ward to the account for the ensuing year. It is said that the accounts 
in this ledger are also balanced with the Treasury ledgers quarterly. 
Reports are rendered to the commissioner from this ledger when 
called for. 

SUPPORT, SCHOOL, AND MISCELLANEOUS LEDGERS. 

These accounts are contained in ledgers kept in the Finance Di- 
vision in a loose-leaf form, a separate sheet being provided for each 
fund. Specific appropriations are made for the construction of 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 43 

buildings, lighting plants, irrigation systems, sewerage systems, etc. 
By the decision of the comptroller such appropriations are treated 
as continuous appropriations — i. e., available for expenditure until 
the object specified has been achieved — a time limit of three years 
being placed on them for this purpose. That is to say, when it is not 
possible for the Commissioner of Indian Affairs to get bids and 
execute a contract during the fiscal year for which these appropria- 
tions are made, the authorit} 7 under which the moneys are expended 
is continued for three years. 

The appropriations for the " support of Indians " are gratuities. 
They are for the support of certain Indian tribes and the mainte- 
nance of agencies where there are no tribal funds available for the 
purpose. These appropriations are annual and, therefore, limited to 
expenditure during the fiscal year for which they are made. 

Miscellaneous appropriations include appropriations by Congress 
for survey, allotment, and classification of lands (practically all of 
which are reimbursable), judgments of the Court of Claims, for the 
construction of bridges, agency buildings, and for sundry miscel- 
laneous purposes, exclusive of the appropriations heretofore de- 
scribed. 

The form used for the ledgers mentioned above consists of a sheet 
18J by 16 inches in dimension, printed upright. The particulars 
provided for in the form are the same as those enumerated under 
" Trust fund ledgers " above, and with the exception that three 
columns are provided to show the balance of the appropriations for 
each year to be covered by disbursements for the same year, and no 
interest column is provided, as these funds are noninterest bearing. 
The method of making the entries is the same as described in " Trust 
fund ledgers." Reports based on these ledgers are rendered to the 
commissioner when called for. 

INDIAN MONEYS LEDGERS. 

Indian moneys accounts are kept in separate ledgers of the Finance 
Division in a bound book, in which there is a page for each agency 
or school. 

TREATY LEDGERS. 

Treaty accounts are kept in separate ledgers in the Finance Di- 
vision in loose-leaf form, a page being provided for each fund. This 
form is used in the following ledgers : " Fulfilling treaties with 
Indians," " Indian moneys, proceeds of labor," and " Miscellaneous 
appropriations." 

Treaty appropriations are made for the purpose of carrying out 
agreements with the Indians for the cession of land, etc. Some of 
these appropriations are also derived from receipts from sales of 
lands under treaty provisions. 

The appropriation, " Indian moneys, proceeds of labor," is money 
collected by disbursing officers for grazing leases, rights of way, and 
sales of farm products. This money belongs to certain tribes, and it 
is turned into the Treasury at certain periods. 

Warrants are issued and entered in this ledger to the credit of the 
tribes. 

The ledgers for " Miscellaneous appropriations " include those for 
survey, allotment, and classification of lands, judgments of a court 



44 



BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 



of claims, for the construction of bridges, agency buildings, etc 
The form used consists of a sheet 18 J by 16 inches, printed broadside 
In the upper right corner of the form provision is made for th( 
entry of the appropriation number and sheet number. 

At the top of the form the name of the appropriation is entered 
Beneath this heading, the form is divided vertically into two 
divisions, the left division for debits, the right division for credits 
On the debit side in the following columns are provided : 

Date. 

Items. 

No. 

Debits. 

The entries in these columns are made from auditor's settlements 
and requisitions for funds to the disbursing officers. 
On the credit side the following columns are provided : 

Date. 

Items. 

No. 

Credits. 

The entries in these columns are derived from appropriation war- 
rants, transfers, and refunds of unexpended balances. 

It is said these ledgers are balanced quarterly with the Treasury 
books. Eeports are made from this ledger to the commissioner when 
called for. 

CREDIT ENTRIES. 

All moneys appropriated by Congress for Indian purposes, all 
moneys which are to be received for the benefit of the Indians in ac- 
cordance with treaties and agreements, in fact, the receipt of all 
money except " Individual Indian monej^s " and its expenditure is re- 
corded in these ledgers. The "Appropriation warrant " is the docu- 
ment and instrument which serves as a means of officially notifying 
the Indian Office that there has been appropriated a certain sum of 
money for use in the Indian Service. The appropriation warrant 
properly filled out is the posting means into all ledgers. The annual 
appropriation warrant is received once a year, and covers all appro- 
priations provided for by Congress for operations of the ensuing 
year. This warrant is received shortly after the 1st of July, and 
postings are made from it to appropriation accounts indicated 
therein. 

Two warrants are received at the end of each quarter covering the 
proceeds of sales of lands — thus eight of these warrants being re- 
ceived in a year. Warrants for all other funds are received from 
time to time, as Congress passes acts covering financial relations be- 
tween the Indians and the United States Government. 

Still another form of warrant is the " Transfer and counter war- 
rant." This document serves as a means for making transfers from 
one fund to another. 

The annual appropriation warrant, which is the one issued an- 
nually, is founded upon the appropriation bill passed by Congress. 
All entries which relate to trust funds of various kinds have as their 
foundation either appropriation bills, acts, treaties, or agreements, 
which are usually of many years' standing. All entries relating to 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 45 

the sale of lands, timber, etc., are founded on similar congressional 
action, but these entries occur more frequently. 

In cases where an erroneous expenditure has been made from any 
appropriation, the auditor adjusts the same by a transfer settlement. 

Deficiencies arising in the settlement of claims by the auditor are 
certified to Congress by the Treasury Department. The Treasury 
prepared transfer and counter warrants; the original is retained in 
the Treasury Department, and the duplicate is transmitted to the 
Indian Office for use of the Finance Division of that office. These 
duplicates are filed in the Office of Indian Affairs for future 
reference. 

DEBIT ENTRIES IN ALL LEDGERS, j 

Appropriation ledgers are not designed to show expenditures 
actually made in the Indian Service, but advances from the Treasury 
Department. The total of all debit entries on the general appro- 
priation ledgers does not represent the total or actual expenditures 
for the Indian Service, even if refunds are taken into consideration, 
because of unexpended balances in the hands of disbursing officers. 
The documents which serve as a means for posting are — 

(a) The form which is the requisition for funds to be advanced 
to disbursing officers to expend under authorities granted them. The 
requisition, when properly passed and signed by the several repre- 
sentatives of departments, sets aside a certain amount of money from 
a specific appropriation which the disbursing officer, or other person 
authorized to expend money, may use for such purposes as have been 
approved under the authorities granted him. He may expend all 
of this money or part thereof. If he expends the entire sum, the 
entry made from the requisition in the general appropriation ledger 
is the entry which is equal to the full expenditure, and which will 
be subsequently registered in the expenditure cost ledger; but if 
only a portion of the amount set aside by means of the requisition 
is spent, the disbursing officer has under his control a surplus amount 
of money, which he may use for other purposes if the scope of the 
authority permits him to do so. If the authority does not permit 
him to use this mone} 7 for any other purpose than the one specifically 
designated, it becomes his duty to report a saving on this authority, 
make a deposit in one of the authorized depositories, and report this 
refund in accordance with prescribed procedure. This, however, is 
at times not done by disbursing officers and then the appropriation 
accounts are not credited with refunds. Because of this procedure, 
the general ledger accounts show a smaller balance under a given 
appropriation than is actually available for use. Amounts reported 
as savings are carried to the proper ledgers. 

(b) The auditor's certification of settlement also serves as a posting 
medium to the general appropriation accounts. These certificates 
represent claims which were settled and paid through the auditor's 
office. Certain classes of claims are paid by the disbursing clerk of 
the Interior Department, which were formerly paid through the 
auditor. When a settlement of a claim is made by the auditor's 
office that office prepares a certificate for each claim, sends it to the 
Division of Bookkeeping and Warrants of the Treasury (to serve as 



74564—15 4 



46 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

a means for its entries) and transmits a duplicate to the Finance 
Division of the Indian Office, from which postings are made into 
the general appropriation ledger. 

Entries are also made from Treasury transfer warrants, represent- 
ing the contra entries to those made from counter warrants. 

TRIAL BALANCES. 

At the end of each quarter the Treasury Department sends to the 
Finance Division a printed form which is headed Balance sheet, 
191 — , Indian ledger of appropriations and expenditures." This 
form is so arranged that it shows the various titles of accounts ver- 
tically, under the following main headings : 

Current and contingent expenses. 

Fulfilling treaties with. 

Trust funds. 

Interest accounts. 

Support of. 

Support of schools. 

Miscellaneous. 

In most instances there are subheadings under each of these, and 
under each subheading there are generally a number of appropria- 
tion accounts, either of a general character or relating to specific 
agencies, schools, and projects. The sheet is ruled in four columns, 
one headed " Balance to the credit of appropriation," a second "Au- 
dited expenditures," and two are blank. A cop} T of this form, with 
figures filled in, is sent by the Treasury Department to the Finance 
Division, and this is used to check the general appropriation ledger 
accounts, in order to disclose any discrepancies which may have oc- 
curred during the quarter. The errors are not corrected by journal 
entry, but correction is made by simply erasing the figures of all 
wrong entries and substituting the correct figures. 

The exact classification as to appropriations and accounts which 
are designated as trust funds is not entirely identical in the Treasury 
Department and the Indian Office. This, however, does not in any 
way prevent the checking of the balances submitted by the Treasury 
Department against the balances maintained in the general appro- 
priation ledgers of the Indian Office. Appropriation accounts are 
maintained in the general ledgers intact for three years, when the 
balances are reported back to the Treasury Department, where they 
are placed into the surplus fund, from which they can not be used 
unless reappropriated by Congress. 

On June 30, annually, all three-year balances of annual appro- 
priations are turned in. So on June 30, 1913, the balances of 1911 
annual appropriations were returned, and at that time the appro- 
priations which remained on the books were for 1912, 1913, and 1914. 

APPROPRIATION AND ALLOTMENT LEDGER. 

The appropriation and allotment ledger, called the " apportion- 
ment ledger," is maintained for the purpose of providing a record of 
each item of appropriation as passed by Congress, in lump sum, and 
the allotments of amounts from each item to the various agencies, 
schools, or projects to which the item applies. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 47 

This ledger is maintained in the Finance Division of the Indian 
Office. It is loose leaf in form, the leaves being 18 by 16^ inches in 
dimension, printed broadside. Rulings are provided for debits and 
credits, but no columnar headings are printed. Both the debit and 
credit sides are ruled alike, and provide a column for the registra- 
tion of references, a broad column in which a description of each 
allotment may be entered, and two columns ruled for amounts. 

HOW POSTED. 

Postings are made directly from a journal voucher showing the 
allotments. This voucher is 8 by 10 inches in dimension, ruled up- 
right, and has the following spaces provided for a general heading: 
Finance — Bookkeeping. 

JOURNAL VOUCHEE FOR GENERAL APPORTIONMENT NO. . 

The following entries are authorized: 



Below the general heading are provided a column for date and two 
columns headed " debit " and " credit." At the bottom of the form 
is provided space for signature for the principal bookkeeper and 
spaces for the initials of the bookkeepers who actually performed 
the entries on the books. The lower part of the form reads as 
follows : 



Principal Bookkeeper. 



Entered Entered 

On the credit side of the apportionment ledger account is entered 
the total item appropriated; on the debit side are entered the allot- 
ments in detail, snowing the distribution of these items to the various 
agencies, schools, or projects. The difference between the credit 
and the debit sides represents the reserve which the board of appor- 
tionment has retained for future allotment. This reserve is not 
posted, but is carried as a balance figure. When, in the course of 
the year, further allotments are made from the reserves still remain- 
ing undistributed, entry is made on the debit side of the ledger in a 
similar manner. Likewise, when transfers are made from one ap- 
propriation account to another a credit entry is made under the 
appropriation account which is to be increased and a debit entry is 
made to the account decreased. The apportionment ledger is not 
balanced or proved as to the accuracy of its postings. 

THE ALLOTMENT AND ENCUMBRANCE LEDGER. 

The purpose of the allotment and encumbrance ledger, called the 
" liability ledger," is to provide a means for recording each allotment 
agreed upon by the board of apportionment, and for showing the en- 
cumbrances which are made against it. In it are also entered changes 
and adjustments which occur from time to time. 



48 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



About 10 of these liability records tire kept in the Finance Divi- 
sion of the Indian Office. They are loose leaf in form, being sheets 
18 by 16J inches in dimension, printed broadside. At the top of the 
form provision is made for entry of the name of the school, agency, 
or project to which allotments are made. Beneath this the sheet is 
ruled in columns, the headings being as follows: 

Authorities granted. 

(Incumbrances against) Annual estimate. 

Modifications — savings (1) . 

Charges (2). 
(Incumbrances against) Regular apportionment. 

Balances (3). 

Modifications — savings (4). 
Charges (5). 
Reference. 

Number (6). 

Date (7). 
Legend (description of item) (8). 
Apportionments ( allotment ) . 

Regular apportionment (9). 

Annual estimate (10). 
Warrants. 

Issued (11). 

Covered (12). 

From this it will be seen that each account, if up to date and ac- 
curately kept, will at any time show the unencumbered balance of 
the allotments. The journal voucher is the posting medium used 
to enter the allotments made by the board of apportionment against 
the corresponding appropriation. These allotments are posted into 
columns 9 and 10 of the liability ledger. 

At the beginning of the fiscal year the appropriation accounts are 
credited in column 10 ("Annual estimate v ) with such amounts as 
are allotted to the particular agency or school for purchases under 
contracts against which will be charged contract encumberances. . 
In column 9 ("Regular apportionment") is entered the amount 
which represents the difference between the total apportionment to 
this agency, school, etc., and the annual estimate set aside in column 
10. The total of the two columns represents the total of the allot- 
ment for this agency or school under this appropriation. In the 
adjoining column (8) under "Legend," notices are made of the 
purposes for which authorities are granted or apportionments made. 
It is supposed to be descriptive, but only very short descriptions are 
given here. Similarly to the apportionments authorities granted are 
segregated as to those which are granted under contracts, " Annual 
estimate," and those granted from the " Regular apportionment." 
Authorities to make expenditures from these apportionments origi- 
nate with the disbursing officers or other Indian Office administrative 
division heads. After they have been properly approved and 
passed, these authorities reach the Finance Division, where they are 
posted into the liability ledger under the appropriate account and 
apportionment therein, in subcolumns entitled " charges " — column 
2 or 5, as the case may be, depending upon the nature of the au- 
thority, whether it be from an " annual estimate " or a " regular ap- 
portionment." In columns 6 and 7, under the general heading " Ref- 
erence," the number of journal voucher or authority and the date 
are entered. When a saving upon an authority is reported by the 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 49 

disbursing officer, the appropriation account allotment is posted in 
columns 1 or 4. Although this is strictly a credit entry, it is posted 
on the debit side of the account and acts as a deduction from columns 
2-5, respectively, in order to facilitate deduction and the entry of 
the difference between the two in column 3, which is " Balances." 

When, upon request of the disbursing officers, or sometimes upon 
demand from the central office, it becomes necessary to modify an 
authority already granted so as to provide for an excess expendi- 
ture over the amount authorized, it becomes necessary to record these 
modifications in the liability ledger, which likewise is entered in the 
column " Modifications-Savings," columns 1 and 4. This is a debit 
entry. If all modifications were footed and added to the total of 
all items under " Charges " and a deduction were made of all items 
comprising savings, the difference would be the balance available 
under " Regular apportionments." Under columns 11 and 12 on the 
credit side of the liability ledger are registered warrants which were 
requested under requisitions coming from the disbursing officers or 
other persons authorized to expend. This entry is made from the 
requisition itself, about six days before the actual issuing of the 
warrant. 

COST LEDGERS. 

The " cost ledgers " are also maintained in the Finance Division 
of the Indian Office. They are designed to show a complete analysis 
of expenditures, by objects (things purchased or used) under each 
allotment for each agency, boarding school, day school, survey proj- 
ect, irrigation project, inspection service, or other miscellaneous 
work. There are eight of these books, seven for regular agencies 
and schools and one for irrigation, allotment, survey, and miscel- 
laneous charges. The form used is loose leaf, 22 \ by 18 inches, 
printed broadside. At the top of each sheet are the following 
printed headings: 

Agency, school, or project. 

Appropriation. 

Page. 

Beneath these headings the form is ruled in columns, the headings 
of which are as follows: 
Date. 

Account or claim. 
Salaries, wages, etc. 
Traveling expenses. 
Transportation of supplies. 
Heat, light, and power. 

Service: Communication service, printing, binding, advertising, etc. 

Subsistence supplies. 

Dry goods, wearing apparel, etc. 

Forage. 

Fuel, illumination, lubricants, etc. 
Stationery and office supplies. 
Educational supplies. 
Medical supplies. 
Equipment material, etc. 
Construction. 

Repairs: Labor and material. 
Rent. 

Miscellaneous. 
Total. 



50 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



The cost ledgers maintained in the Finance Division carry only- 
such accounts as deal with the expenditures made for the field service. 
Expenditures of disbursing agents and others who are in the field 
are accounted for through this cost ledger, but expenditures incident 
to the conducting of the business of the Indian Office are not made 
a part of this record, except such expenses as tolls on telegraph and 
telephone messages sent and received by the office and the salaries 
of a few employees not paid from the allotments from items in the 
legislative bill. In other words, these "cost ledgers" embrace an- 
alyses of expenditures from appropriations made for the Indian 
field service only. 

CLASSIFICATION BY LEDGER SHEETS. 

By arrangement of the loose-leaf cost-ledger sheets, the cost ledgers 
are self -indexing, in so far as they relate to the main classification 
which divides the eight cost ledgers into sections. These ledger sec- 
tions and their subdivisions are: 

AGENCY AND SUPPORT OF INDIAN SECTION. 

All agencies, no matter where located geographically, are brought 
together into this section by alphabetical arrangement. Each agency 
has allotted to it as many loose leaves as there are different allot- 
ments or appropriation items affecting it. 

THE BOARDING-SCHOOL SECTION. 

All boarding schools, no matter where located geographically, are 
brought together into this section by alphabetical arrangement. 
Each boarding school has as many sheets as there are allotments or 
items of appropriation applicable. 

THE DAY-SCHOOL SECTION. 

All day schools, no matter where located geographically, are 
brought together in this section by alphabetical arrangements. Each 
day school is allotted as many sheets as it has different allotments or 
items of appropriation applicable. 

THE ALLOTMENT AND SURVEY SECTION. 

The sheets are arranged alphabetically by the name of the reserva- 
tion where the allotment of lands and survey work is being per- 
formed, regardless of its geographical position. Under each reser- 
vation there are as many sheets as there are allotments or items of 
appropriation. However, there is seldom needed more than one 
sheet for each. 

THE IRRIGATION SECTION. 

Each reservation on which irrigation work is carried on has as 
many sheets as there are allotments or items of appropriation 
applicable. There are few for which more than one sheet is needed. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 51 



THE MISCELLANEOUS SECTION. 

The miscellaneous section combines all the functions for which a 
separate section is not provided. They may be such as extend over 
the entire service or are of minor importance and not frequently 
occurring. Some of the sheets representing these functions may 
have to do with only a few reservations or in some cases with a 
single reservation. The main classifications are: 

I. Attorneys' and counsels' fees. 
'2. Catholic mission schools. 

3. Five tribes. 

4. Five tribes' schools, general supervision. 

5. Inspection, special agents. 
, 6. Supervision of schools. 

7. Construction (which covers supervisors of construction). 

8. Industries (which cover general officers and employees super- 
vising agricultural and industrial work). 

9. Health inspection (which includes general health supervision 
officers) . 

10. Warehouse inspection and advertising of supplies, etc. 

II. Suppression of liquor traffic. 

12. Miscellaneous timber expenses (which include general super- 
vision of forestry work). 

13. Sundries. (Into this fall such items as can not readily be 
classified under any of the above specially set up appropriations or 
classifications.) Information entered here relates to: 

(a) Telephone and telegraph service of the main Indian Office. 

(b) Expenses of particular Indian commissions. 

(c) Other similar and incidental expenses. 

Any of the above 13 subsections of the miscellaneous section of the 
cost ledgers may have as many loose-leaf sheets as there are allot- 
ments or items of appropriation applicable. 

DIFFERENCE IN USE AS COMPARED WITH ALLOTMENT LEDGER. 

Since, by congressional action, there have been established many 
lump-sum items of appropriation, each one of which is for a specific 
function of the whole Indian Service, allotments may be made from 
each item to nearly ever}^ reservation. Therefore, the title of a 
single item of appropriation may be found on as many loose-leaf 
cost-ledger sheets as there are agencies, schools, day schools, boarding 
schools, etc. There afe approximately as many sheets as may be 
found in the allotment and encumbrance ledger (" Liability ledger ") , 
but the sheets are differently arranged and the columnar analysis 
shows expenditures by objects. 

POSTINGS TO COST LEDGERS. 

The entries, however, are made from a different source, viz, from 
claims prepared by the claim section and from quarterly accounts 
rendered by the various disbursing officers. Each claim and each 
supporting voucher attached to the disbursing officer's accounts 
current is analyzed, and the several items are as charges under the 
appropriate allotment or appropriation item, the amount being 



52 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



distributed in columns. The quarterly accounts are so prepared 
that they are already classified and analyzed by appropriations, with 
the result that the cost clerk posts direct from these statements. 
The quarterly accounts are not entered in the cost ledgers until they 
are examined by the account section of the Finance Division. The 

osting, therefore, differs from the amounts of the claims rendered 

y the amounts of the adjustments. 

METHOD OF DETECTING ERRORS. 

There is no means for proving the accuracy of the postings by 
trial balance. Errors, therefore, are discovered only as a matter of 
chance or by detailed checking. If. in the course of the work, the 
cost clerk notices that a wrong account or column has been posted, 
this may be corrected. So. too, if it be discovered that a w^rong 
charge has been made on the abstract of disbursements, this is sent 
back to the account section for a supplemental examination, although 
this is not strictly considered a part of the duties of the cost ledger 
clerk. The general rule is that anyone, be it his special assigned 
duty or not, shall call to the attention of those responsible any 
errors or mistakes which come to his notice. Because of the present 
procedure, the Auditor for the Interior Department may make changes 
and adjustments either at the suggestion of the account section of 
the Finance Division, or of his own accord, and because the auditor 
does not systematically send notice to the Finance Division of 
changes made, the cost ledger clerk dees not receive all adjust- 
ments. He receives all adjustments with regard to claims and makes 
the necessary changes on the books. 

Adjustments to be made on claims may be brought to the atten- 
tion of the cost ledger clerk by checking the entries made in the 
cost ledger against the entries made in the general appropriation 
ledger. The general appropriation ledger clerk also receives from 
the Treasury Department certificates of settlement, upon which are 
shown, by appropriation accounts, the amounts of claims liquidated 
through the Treasury Department upon the auditors certification. 
Usually there is a certificate for each claim. These items are posted 
into the general appropriation ledger to the respective accounts. 
Periodically the cost ledger clerk checks the various claim accounts 
of the general ledger and the accounts as shown in his cost ledger 
in the total columns and ascertains that no differences exist between 
the two books, or if he ascertains that a difference does exist, he 
makes the necessary inquiry, changes, and adjustments. This is 
true of all claims except those for railroad freight paid from the 
appropriation, " Purchase and transportation of Indian supplies." 
Items are charged to the fiscal year during which they are incurred 
or of which they are a liability, and not necessarily to the year in 
which they are paid. An index is kept showing at what agencies 
and schools expenditures from each fund are found, and when the 
fourth quarter of the accounts has been entered the books are footed 
up and summarized. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



53 



CHAPTER VIII. 

Methods of Examination and Audit. 

The audit of transactions of the Indian Service is carried on by 
the Auditor for the Interior Department, whose office is a part of 
the Treasury Department. In this a separate division has been 
established which passes on all vouchers and accounts dealing with 
Indian matters. The audit by the Treasury Department, however, 
is based on certification of persons in the Indian Service. The cer- 
tification is done by the person in charge of the superintendency 
or administrative unit in which the transaction takes place. This 
is followed by an examination in the Finance Division of the Indian 
Office. For the purpose of administrative examination two sections 
have been created in this division ; one, called the " accounts section," 
handles the accounts current of the Indian Office — i. e., the receipts 
and disbursements of Indian agents; the other, called the "claims 
section," handles the vouchers which are to be paid by Treasury 
warrant direct. 

EXAMINATION AND AUDIT OF ACCOUNTS CURRENT. 

The purpose of examining quarterly accounts current of disburs- 
ing officers in the Finance Division is to give to the returns a central 
office review and certification before sending them to the Auditor 
for the Interior Department. 

AUTHORITY VESTED IN THE EXAMINERS. 

The examiners attached to the Finance Division have no authority 
to allow or disallow any items reported by the disbursing officers 
in their quarterly accounts current. They may question and make 
the necessary memoranda on the abstracts of disbursements, dupli- 
cate copy, but they may not change, erase, or cancel any figures or 
items, make transfers, etc., on any statements or vouchers submitted 
by the disbursing officers. In making their examinations they are 
vested only with the authority to verify, audit, and examine the 
accounts and call the attention of the Auditor for the Interior De- 
partment to such discrepancies and to such items of difference which 
in their opinion should be adjusted or canceled. 

CERTIFICATE OF ADMINISTRATIVE EXAMINATION. 

There is no formal statement to which the examiner who makes 
the administrative examination certifies. When he has completed 
his examination he prepares a memorandum of exceptions, if he has 
any to note. He is held responsible for the faithful performance of 
his work through initialing for identification. 

PROCEDURE OF ADMINISTRATIVE EXAMINATION. 

Upon receipt of the quarterly accounts current in the Mails and 
Files Division, each is given a mail and files office number, and has 



54 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

attached to it the usual transfer or mail distribution card. The 
quarterly accounts current are then transmitted to the filing section 
connected with the Finance Division, where the accounts are given 
a Finance Division office number consecutively, a new series being 
given each quarter from 1 up. The accounts current are ex- 
amined so far as practicable in the order in which they are num- 
bered. After receiving the accounts current the Auditor for the 
Interior Department is given a list or a schedule from time to time 
showing the date of sending from the held disbursing officer and the 
date of receipt in the central office. This is done in order to show the 
auditor whether or not a delinquency exists in the rendering of any 
accounts to the Indian Office. The law does not permit the quar- 
terly accounts to remain in the Indian Office for examination longer 
than 60 days, and should an account not be transferred by the Indian 
Office to the auditor's office for the Interior Department, the request 
for the removal of such a delinquency would have to be forwarded 
through the Secretary of the Interior to the President, who alone 
has the right to remove such delinquency. The method of exami- 
nation of these accounts is clearly defined in rules prescribed by the 
head of the account section of the Finance Division of the Indian 
Office. At the present time the rules governing each examiner are 
as follows : 

Method of handling papers, etc., in examining cash accounts, and important 
points to be observed by examiners. 

1. The file clerk issues the account to be examined, together with the previous 

account, including the account current, check approvals, if any. and the 
" memoranda." 

2. The examiner obtains the exceptions to previous account, and also the 

" memoranda of authorities," from bookkeeping section. 

3. The examiner checks the account current (form 5-115a) as follows: 

a. The period for which rendered. 

b. The balances on hand first of quarter with balances as shown by 

the memorandum account current for the previous quarter, check- 
ing each appropriation " head" and each amount thereunder. 

c. The date of bond with date shown on the carbon copy of requisition 

for funds. 

(/. The advances during the quarter from the treasury as shown by the 
carbon copy of requisitions on file, checking amounts under each 
appropriation or fund, and seeing that they are stated exactly as 
shown in requisition and checking the requisition with red pencil. 

e. The signature of superintendent and signature and seal of notary 
public. If the account is " certified on honor," seeing that copy of 
authority therefor is attached to the account current. 

/. The analysis of balance with subsidiary cash and net balances in 
depositaries. Seeing that total outstanding checks, amount in each 
depositary, and net balance are shown. 

g. That first endorsement is dated and signed by the disbursing officer. 

h. The expenditures paid in cash as shown by subsidiary cash account 

with vouchers. 

i. Seeing that the proceeds of all trust fund, benefit, etc., warrants, 

where the ;i mounts are to be accounted for by the superintendent, 
as shown by carbon copies of auditor's settlements in memorandum 
file, are taken up on the voucher for miscellaneous individual In- 
dian money, or charged within ninety days of date of settlement. 
j. The columns for individual Indian moneys, and seeing that they are 
grouped together on the account current and abstract of disburse- 
ments. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 55 



The vouchers with abstract of disbursements as follows : 
(1) In general: 

A. All vouchers must show date and file number of authorities for ex- 
penditures consisting of either — 

a. For regular salary lists — see instructions as to pay-roll vouchers. 

b. For advance authorities — see instructions as to sundry classes of 

vouchers. 

e. Approvals of indebtedness — checking and placing both original 
and memorandum authority with memorandum voucher, and 
making slip to attach to original voucher, unless authority 
covers labor, in which case sending original authority with 
original voucher. 

d. Sections 287, 291. regulations 1904, as amended — 

In all cases comparing the expenditures as shown by the vouch- 
ers and the appropriations as shown on the abstract of dis- 
bursements with the appropriations shown by the authorities. 
If the charges are not made on the abstract in accordance 
with the authorities granted, and there is time before the 
close of the fiscal year, requiring the superintendent to make 
correction in the following quarter by debiting the proper 
appropriation and crediting the one from which the payment 
was erroneously made, and showing the correct charge on the 
memorandum account current and abstract of disbursements. 
If too late in the fiscal year to do as above outlined, merely 
calling attention to the error and correcting memorandum 
account current and abstract of disbursements as above indi- 
cated, the auditor's office in the latter case making the neces- 
sary debits and credits. 

e. Where there is any question as to the charge to be made against 

an authority, either in connection with the regular vouchers 
or individual Indian money vouchers, the examiner makes the 

entry, followed by the words " See exception quarter, 

19__.'" The necessary exception is taken and. when satisfac- 
torily answered, the clerk removing the exception corrects the 
entry, if necessary. 

/. Where a single authority carries separate amounts for specific 
items, all payable from the same appropriation, e. g. $200 for 
repairing school buildings, $300 for building school fences, 
$600 for plastering dormitory, $50 for carpenter labor, and $25 
for brick and stone mason, etc., then the first examiner making 
charges against the authority must divide the space allowed, 
for entries so as to group the charges for each specific item 
together. Succeeding examiners will then make entries sepa- 
rately for each item until the amount therefor is exhausted. 

g. All expenditures must be evidenced by receipts unless payment 
is made by the official check of the superintendent, which 
when paid goes to the Treasury Department and operates as a 
receipt. The voucher must show check number, date, amount 
of check, to whose order drawn, and depositary on which 
drawn. If paid in cash, amount must be checked in the sub- 
sidiary cash account by the examiners. 

Certificate as to correctness of vouchers showing payments to 
Indians for purchases from them are required, even though payment 
is made by check. They are obtained by having the Indians sign the 
roll as if receipting for payment. 

4. Purchase vouchers (not made from Indians) are checked as follows: 

a. The signature of claimant with name shown at head of voucher. 

b. The certificate of employees showing receipt of goods, etc. 

c. Noting date of check to see that no advance payments are made. 

d. The certificate of superintendent. 

e. The date and number of the authority. 
/. The purpose for which purchased. 

g. The method of purchase. 



56 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

4. Purchase Touchers — Continued. 

h. The number, date, and amount of check as staled, and seeing that the 

amount agrees with total of voucher. 

i. The items purchased with abstracts A and B of property account. If 

the supplies purchased are not taken up in property account, but 
are expended on purchase voucher, seeing that proper certificate of 
expenditure by an employee is -filed with the voucher. 
Expendable property other than subsistence supplies purchased in open market 
and expended in the quarter in which paid for, need not be taken up in the 
property account, provided a certificate signed by the employee under whose 
supervision the property is expended is placed on the purchase voucher. 
See section 453. Regulations 1904. 

Authority for expenditure. The original authority must be attached 
to the voucher and referred to thereon by number and date. If 
previously submitted, the voucher with which filed must be stated. 
Enter on memorandum of authorities the amounts expended as 
shown by the voucher. If more than one authority is cited, see that 
the amount expended under each is stated. 
k. If for purchase of supplies an amount of purchase at any one time 
exceeds in the aggregate $500, at least three weeks public notice by 
advertisement must be shown unless — 

(1) An exigency is declared by the Secretary which will appear in 

the authority, which must also be signed by him and must 
not exceed $3,000. 

(2) Or the supplies, contracts, or labors are for irrigation works 

and do not exceed $5,000 (35 Stat. L.. 71). 

5. Traveling expenses — Voucher Form 5-335d : 

a. The purpose for which trip 'is made must be specifically stated. See 

circular 759. 

b. Subvouchers Form 5-927 must be furnished for all payments amount- 

ing to more than $1 except — 

(1) Railroad fares. 

(2) Sleeping-car fares. 

(3) Meals without lodging, when itemized separately. The exact 

days and whether for supper, lodging, breakfast, or dinner 
must be stated on the voucher. 

c. Affidavits may be verified before superintendent or clerk designated 

by the Secretary of the Interior to administer oaths to traveling 
expenses. See circulars 680 and 696. 

d. Checking details of check making payment. 

e. When for pupils, the names and ages must be stated in each instance. 

For others, names and necessity for paying their expenses should be 
shown. 

/. Making charges against authority. Carefully noting the reading of 
the authority to see that all expenses are properly chargeable to it. 

g. Expenses must be fully itemized on the voucher as well as on sub- 
vouchers. 

6. Miscellaneous voucher (Form 5-335a) : 

a. Checking authorities, certificates and details of check covering pay- 
ment, same as for purchase vouchers. 

t). Receipts for prepaid express or freight must always be furnished and 
the number, etc., of voucher showing purchase of articles trans- 
ported must be stated. 

c. The rule as to competition applies. 

d. Deeds for purchase of land must be filed with voucher. 

e. If the service is a continuing one, an informal agreement on Form 

5-086 must be attached to the original voucher or referred to 
thereon. Note on memoranda of authority, the number, etc.. of the 
voucher to which agreement is attached, if any. 

7. Pay roll of Indian freighters (Form 5-334) : 

Vouchers for transportation by Indians must be supported by bills of 
lading signed by each freighter. If the old form of voucher is used, 
the words " without package numbers " should be stricken from the 
certificate of weigher before signing. 

8. Making certificate on Form 5-167 and attaching to abstract A of property 

account. The examiner should enter all items of property not taken up or 
expended on proper certificate and sign the certificate. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 57 

9. Computing totals for each appropriation on abstract of disbursements and 

check amount carried forward to account current, after making any neces- 
sary corrections. 

10. To fill out indorsement on back of original abstract of disbursements 

showing total amount chargeable to each appropriation or fund, and 
place his initial and the date on line showing footings on last page of 
memorandum abstract and see that the correct disbursements under each 
appropriation and fund are shown on the memorandum account current. 

11. To check over all matters in the memorandum file relating to the account, 

aud remove therefrom all letters, etc., which do not concern future 
examinations. Papers which are to be " dead " filed should be so marked 
when removed from the memorandum folder and turned into the file 
clerk. 

(A) Pay roll of employees (Form 5-330) : 

a. To check each employee with cards in education division as to — 

Name. 

Period of service. 
Salary. 

Leave without pay, etc. 

b. To compute number of months and days of service and check 

same on the roll. (See Treasury Circular No. 67.) To see 
that the exact number of months or days for which payment 
is made is given. 

c. Authorities for irregular employees should be handled in the 

same manner as those for purchases, except that the original 
authority must remain with the original voucher. 

(/. To check positions paid as stated on the roll with those au- 
thorized, and the salaries thereof and appropriations from 
which paid as shown by salary list in education division. 

e. To compute total charge against each appropriation, both for 
the regular and irregular employees, and see that superin- 
tendent's recapitulation of same on last page of pay roll is 
correct. 

/. To see that check number, amount, and date of each check are 
given, or that the receipts for cash payments are attached. 

g. To see that roll is signed by superintendent and sworn to, 

with notary's signature and sealed in proper form. 

h. To make certificate as to regular employees on' back of roll, 

both on original and memorandum, and have same signed by 
the chief of division. 

i. To recp.fi re that periods of service be specifically stated and 

discourage the use of " ditto " marks. 
(A) Annuity pay rolls (Form 5-322) : 

a. To check names with former rolls or with approved rolls, com- 

paring year of birth, sex, and relationship, and notations of 
trust f und settlements. 

b. As to new enrollments to see that date of birth is given. (No 

new enrollments are allowed at the Osage Agency, but pay- 
ments are made to the heirs of a deceased Indian.) 

c. As to transfers, to check on former roll by number given in 

first column of present roll. 

d. As to deaths, to make check on former roll when omitted from 

present roll, and after completing checking the roll, go over 
former roll, looking at deaths reported to see that no such 
names are carried forward to neiu roll. One payment after 
death is allowed from each class of funds. 

e. To check certificates of head men, etc., with the roll (for pay- 

ments to others, taking care of minors and incompetents). 
/. To check roll as to items covered by superintendent's certificate. 
g. To see that shares of deceased persons are deposited to the credit 

of their estate unless heirs have been determined, in which case 

the office file number and date of findings must be given in 

" remarks " column. 
//. To see that names of persons to whose order checks are drawn 

are shown on roll and that check numbers and dates of checks 

are given. 



58 



BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 



11. To check over all matters in the memorandum file, etc. — Continued. 
(A) Annuity pay rolls — Continued. 

i. To examine amounts paid and data as to check drawn, or signa- 
tures, if paid in cash. 
;". If the payment is a special one and special instructions have 
been issued therefor, to see that such instructions are 
observed. 

k. To compare total amount paid with abstract of disbursements 
and the appropriations authorized; making entry on the 
memorandum of authority showing the amount paid, etc. 
(1) When shares are deposited in bank to the credit of the 
Indians, to see that the bank account numbers are 
shown in the " remarks " column on the roll opposite 
each amount deposited, and that the schedule at the 
end of the roll, giving the names, numbers, amount 
deposited, and number in bank of each item is filled 
out ; also, to see that the aggregate of such deposits 
appears on a separate line on the debit side of the 
account current under the various funds or appropri- 
ations as a "transfer to bank accounts" instead of 
being included with the amounts actually paid to 
Indians (however, total of the deposits and the 
amounts paid direct to Indians should be carried to 
abstract of disbursements under the proper head- 
ings) ; also, to see that annuity roll numbers appear 
in the " remarks " column of the abstract of bank 
accounts opposite each account deposited. 
(B) Land sales roll (Form 5-319) : 

a. To verify balances brought forward. 

b. To pay no attention to the " received " column except to see ■ 

that the proceeds of all cash sales which have been approved 
three months or more, and that within 32 days after they 
fall due all notes and interest payments shown by liability 
cards. Form 5-403. are collected and the amounts taken up. 
If not taken up. exception should be taken, and that fact 
noted on the copy of approval of sale or the liability card, as 
the case may be. 

c. " To check ray carefully the " deposited to credit of Indians" and 

" paid direct to Indians " columns. In every case refer to 
the authority or the liability card, as may be proper. 

d. If a copy of the approval of the sale is not in the temporary 

land-sale file, to send to the general files for it. 

e. Liability cards, Form 5-403, one of which there should be for 

every sale made under deferred payments, will be placed in 
the temporary land-sales file as they are received. They 
should be kept in this file until the sale has been approved, 
when the date of the approval and the authority number of 
the approval should be indorsed thereon. They should then 
be placed by the examiner in the permanent liability card land- 
sale file. The purchaser is not required to pay any interest 
accruing prior to the date of the approval of sale. 
/. When a sale is made under deferred payments and there is no 
liability card, Form 5-403, in the temporary or permanent file 
(both should be consulted), a dummy should be placed in the 
permanent file and a card called for in the exceptions. This 
dummy should give every material fact which can be ascer- 
tained, and should show that the original card was called for, 
followed by the date and the examiner's initials. 

(1) As soon as all the proceeds of a cash sale have been 

cleared from the land-sales roll the copy of the ap- 
proval should (unless it carries with it an authority 
for further payments) be marked conspicuously as 
" dead " and sent to the file room. 

(2) If the approval also authorizes disbursements, after 

deposit of the proceeds, an abstract of such authority 
on Form 5-139a (pink) should be made for each heir 
and fastened to the face of the copy of the approval, 
for file with the bank account authorities. All amounts 
paid from the proceeds under such authority will then 
be recorded on said pink sheet. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



59 



11. To check over all matters in the memorandum tile, etc. — Continued. 

(B) Land sales roll — Continued. 

/. When a sale is made under deferred payments, etc. — Continued. 
(3) In case of a sale under deferred payments, as soon as 
the original or dummy liability card has been in- 
dorsed with the date of approval and placed in the 
permanent file, the temporary file should be cleared 
as above indicated. 

h. When part of the proceeds are transferred to another school, 

and tbe approval also grants authority for payment to the 
Indian, form 5-139a should be made out and attached to 
the face of approval as above instructed, but marked 
plainly with the name of the school to which the funds are 
transferred, sending same to tbe file room separately for 
filing with the bank authorities for said school. 

i. If deposits are returned to bidders by checks, the check numbers 

must be appropriately cited, and if returned in cask, a cash 
receipt should be furnished. 
To check totals of amounts on hand at beginning and close of 
quarter; amounts received; amounts deposited; amounts paid 
direct to Indians; amounts returned to bidders; amounts 
transferred to other schools, etc., with account current. Make 
transfer slips, unless already in memorandum folder, for all 
amounts transferred to other schools. 

k. To see that all money received for the purchase of land is taken 
up on the account current under " special deposits " and held 
there until after official notice has been received of the action 
of the department, and to see that all proceeds of such sales 
shown on voucher as on hand at the end of quarter are car- 
ried in the column " deposits with bids." 

Proceeds of sales of timber should be shown as " individual 
Indian money timber sales " on the account current, and on 
the roll in the column " Deposit with bids " if on hand at be- 
ginning or close of quarter. 

I. The name of each Indian must be shown, the amount on hand 
first of quarter belonging to each, the amount received for 
each, the amount paid to or deposited to the credit of each, 
and tbe amount on hand at end of quarter belonging to each. 
To see that the proceeds on hand are dropped from the land 
and timber sales voucher, if the sale has been approved by pay- 
ment to the grantors under proper authority, or by deposit 
to their credit in banks taking same up on abstract of bank 
accounts. Should a grantor be dead and his heirs undeter- 
mined, the proceeds should be deposited to the credit of his 
estate in order that they may draw interest. If any balance 
in connection with an approved sale in excess of $10 is car- 
ried at end of period to require the superintendent to make 
a special explanation. 

m. Some of the sales made at Seneca and Kaw come under special 
regulations which must be consulted in checking up. 

(C) Rentals on allotments (agricultural) Form 5-286. 

a. To check amounts on hand first of quarter with former roll. 

6. To get liability cards from file room and to check amounts re- 
ceived during quarter with said cards, making entry of the 
quarter in which the amounts are taken up. To see that 
each share is shown correctly where more than one person 
shares in the rental, and note exception on cards, if exception 
is taken. If no card can be located, to make a dummy card 
and take exception, asking for file number of office approval 
of lease and require a card, unless it has previously been fur- 
nished, in which case the date it was submitted must be stated. 

c. To check schedule of deposits with amounts shown as deposited 

in column " deposited to credit of Indians." To see that said 
schedule shows both the lease number and the bank account 
number. To check amounts paid direct and see that sections 
33 to 38, regulations of 1913 are complied with. See that each 
lease shows that correct balance at end of quarter. 

d. To check total amount received with abstract of miscellaneous 

funds. Check total amount paid to Indians with account cur- 
rent and abstract of disbursements. 



60 



BUSINESS AND ACCOUNTUSTG METHODS INDIAN BUREAU. 



11. To check over all matters in the memorandum file, etc. — Continued. 

(C) Rentals on allotments — Continued. 

e. The file number of departmental approval of heirship findings 

must be cited for all payments made direct to heirs who are 
not shown on cards. Whenever the names of the additional 
heirs are approved they must be entered on the liability card 
and the authority number and date must he inserted on 
the card by the examiner. 

f. If no lease roll is with the account, to examine former account 

and the card records to see if there are any leases. 
</. Year of birth of each lessor should be given. 
//. To make transfer slips (if not already in folder) for all amounts 

transferred to other schools, 
i. To see also regulations of July 14, 1913. Rentals on allotments 

(mining). See sample account and instructions on form 

5-154o (final sheet). 

MISCELLANEOUS INDIVIDUAL INDIAN MONEY. 

(See instructions on form 5-140a, and regulations of July 14, 1913.. | 

To make transfer slips (if not already in memorandum folder) for all 
amounts received from or sent to other schools. 

(D) Abstract of bank accounts. 

a. Not to check balances on hand first of quarter. 

b. To check deposits with schedules attached to land sales, annuity, 

lease, miscellaneous individual Indian money, and royalty rolls 
(form 5-1 54b) and with schedule at end of annuity roll. To 
consult sample account on reverse of form 5-129a. * 
c To compare the authorities found in files and note on the au- 
thorities in the proper column therefor the amounts expended 
as shown by the checks, and whenever an authority is ex- 
hausted, to mark it " exhausted " and place it in the file of 
exhausted authorities. 

d. To check the total amount of checks drawn with the abstract of 

disbursements. 

e. To see that a recapitulation and analysis are made on form 129a. 

f. To make transfer slips (unless already in the memorandum 

folder) for all amounts transferred to other schools. 

g. See regulations of July 14. 1913. 

EXAMINING VOUCHERS FOR RECEIPTS BY DISBURSING OFFICERS. 

Although the rules prescribe that an examination shall be made of 
all receipts of money by disbursing officers, the records which are 
available in the Office of Indian Affairs which may be used as a 
basis for verification are so meager that the examiner is unable to 
make the examination with any degree of efficiency. The Indian 
Office has no means of telling how much money each disbursing 
agent has on hand which he has collected from " miscellaneous " 
sources, except as reported by him in his account current which is 
submitted quarterly. Some " miscellaneous receipts " lend them- 
selves to a meager check: others can not be verified at all by ex- 
aminers in the central office. It is quite possible for the disbursing 
officer to grant permits for various purposes for which payment is 
to be made to him. The amount of these permits is determined fre- 
quently from the quantity of service performed. It only requires an 
incorrect reporting of quantity of service performed to enable the 
officer to falsify his account and no further examination can be 
made of the amount received by the disbursing officer except in so 
far as a false return may be detected by special agents in the field. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 61 
METHODS OF EXAMINING PROPERTY ACCOUNTS. 

The rules prescribe that the disbursing officers must report prop- 
erty received on a property return. But as in case of the examina- 
tion of the miscellaneous receipts, there is little or no means pro- 
vided for checking the accuracy of these property returns. The 
Office of Indian Affairs is only aware of the fact that the disbursing 
officer has received the article or articles in question when he reports 
the fact on "Abstract A" of his property account. If articles are 
purchased and paid for through the Indian Office, invoices are 
checked against "Abstract B " of his property account ; and if all 
the articles named in such an invoice are taken up on the abstract, 
the invoice is approved, and the transaction, so far as the purchase 
is concerned, is closed. The amount of the property remaining on 
hand at the close of a quarter is not checked to the property return 
for the next succeeding quarter. Nor if it were so checked would 
it prove anything except the reporting skill of the officer. The 
checking of one return with another is only done where it is a final 
return under a bond or the final return of a disbursing officer, be- 
cause in that case the successor to the retiring disbursing officer is 
required to prepare a certificate showing what properties he has 
taken over. At no time is there a definite inventory prepared, at 
least, not an official inventory. The disbursing officers, when they 
make an accounting, for self -protection sometimes prepare an inven- 
tory, but this is not required. The Office of Indian Affairs has no 
record, and, therefore, the examiners in checking the property re- 
turns have little or no means whereby they can verify the correctness 
and accuracy of the property returns provided. 

EXAMINATION OF CLAIMS TO BE PAID BY TREASURY. 

The accounts against the Government that are to be sent to the 
Treasury for payment are called " claims " as distinguished from 
those paid by the disbursing officer. Claims are divided into three 
main classes : 

1. " Supply claims," which cover all the supplies which are bought 
on annual estimates, and "miscellaneous claims," known as open- 
market purchases, which are made from time to time to supplement 
the annual estimates under " authority C." 

2. "Annuity and trust claims," or those made by individual Indians 
for back annuity and shares of trust funds belonging to the tribe. 

3. " Railroad transportation claims," which include those for both 
freight and passenger service. 

SUPPLY CLAIMS. 

Supply claims are divided into two main groups — claims which 
cover supplies bought on annual estimates, and miscellaneous open- 
market purchases. These latter claims cover claims for advertising, 
building claims, school claims, telegraph refunds, and transfer 
claims. 

UNDER ANNUAL ESTIMATES. 

Supply claims which cover supplies purchased on annual estimates 
are transmitted to the home office from warehouses in the Indian 



74564—15 5 



62 BUSINESS AXD ACCOUNTING METHODS INDIAN BUREAU. 

Service. These warehouses are located at Chicago, Xew York, St. 
Louis, Omaha, and San Francisco, respectively. Supplies on annual 
estimates are bought under contract duly advertised, copies of which, 
after execution, are placed on file in the claim section of the finance 
division. These contracts are given serial numbers and filed in that 
order. 

Purchases are made on requisition by the warehouses. When sup- 
plies are delivered, they are accompanied by a prescribed form of 
Government voucher — an original and two copies. The warehouse- 
man certifies on the voucher the fact that the goods have been re- 
ceived, and the inspector certifies that they are in accordance with 
the requirements of the contract. The original and one copy of 
the voucher are transmitted to the central office. The voucher is 
received by the mails and filing section and indexed as a claim. 
It is given a serial claim number which, with a brief description of 
the subject matter, and is typed on slips in accordance with the 
general filing system of the claim section. Three slips are made. 
One slip is prepared and filed away under the name of the con- 
tractor, another under the claim serial number, and if the con- 
tract pertains and relates to some special school or agency, it is filed 
under that school or agency. When a claim relates to a number of 
schools or agencies, a separate slip is not filed under each of the 
schools and agencies mentioned. It is then considered as a claim for 
the entire service. 

The filing system provided in the claim section also includes a ledger 
record for each contractor. All claims of the same contractor are 
listed, with the amount of 'each claim, and the action taken thereon 
is indicated opposite each claim number under the contractor's 
name. In order that no discrimination be made between the amount 
of work involved in the examination of claims, the examiners are 
required to take up the claims in the order in which the claims are 
numbered. 

EXAMINATION OF CONTRACT CLAIMS. 

The examiner separates the duplicate of the invoice from the 
original and checks the original invoice with the contract to see 
that the prices as stated are correct. He then checks the invoice with 
the schedule. By checking against this schedule the amounts set 
aside by the bookkeeper to meet the payments on these contracts are 
verified. 

After the examiner has checked the invoice, he arranges the in- 
voices in order of the appropriations, to meet the requirements of 
the Treasury Department as indicated in the schedule which the 
Treasury Department furnishes. He then dictates his claim, and 
it is written on a form letter for transmittal, with the schedule 
attached. This schedule shows the name of each Indian school or 
agency involved under the appropriation to be charged, and oppo- 
site the name of the school or agency the amount chargeable to 
each is shown. These amounts are aggregated and the total amount 
chargeable to each appropriation is brought out. The total of the 
schedule is carried forward to the face of the sheet which transmits 
the claim and shows the total amount to be paid. 

After the examiner has finished the verification of a claim, he 
transmits it to the chief of the claim section for review. If found 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 63 

correct, it is passed on to the ledger keepers, who enter the amount 
as shown on the claim against each appropriation. It then is trans- 
mitted to the cost ledger clerk, who enters the amount under each 
appropriation, grouping the entries by schools, agencies, etc., and 
with a further subclassification by the items of expenditure under 
each subhead. The claim, when so entered, is transmitted to the chief 
of the Finance Division for his approval, and thereafter it is sent 
to the second assistant commissioner. 

From this point the claim may take one of two paths — if it is a 
claim in respect to which there is attached no doubt as to its legality 
or justness, it follows the ordinary course of business and is trans- 
mitted to the chief disbursing clerk of the department, who makes 
the payment. If the claim involves construction of law or any ques- 
tion that would make it doubtful, or if the claim belongs to a prior 
fiscal year, and is examined in the latter half of the succeeding fiscal 
year, the claim is sent to the Auditor for the Interior Department 
who transmits it further in the usual manner. 

The chief disbursing officer pays some of the personal-service claims 
and some traveling expenses. To him are not referred any claims 
for annuity and trust funds, transportation claims or telegraph 
claims, all of which are sent directly to the Auditor for the Interior 
Department. 

PREPARATION OF CLAIMS. 

Claims are prepared by the examiner in the form of a typewritten 
schedule, made in four copies, which shows the appropriation, the 
schools and the amounts chargeable to each. The original copy is 
transmitted, with the original invoice, to the Auditor for the Interior 
Department or the chief disbursing officer. The second copies of the 
invoice and the schedule are filed under the claim number, numeri- 
cally. These constitute the office record of claims. The third copies 
of the schedule and statements are mailed to the claimant, and serve 
the purpose of informing him how the claim was settled. The fourth 
copy is retained by the examiner, as his personal record of the work 
performed by him. 

CLAIMS FOR " OPEN MARKET " PURCHASES. 

" Supply claims " include large numbers of " open market purchase 
claims." Before an open market purchase can be made, an " author- 
ity " has to be obtained from the administrative section of the office. 
These authorities are ordinarily transmitted to a Avarehouseman with 
the accepted bid, and an abstract of all bids which were received. The 
warehouseman places his order, receives the supplies at the ware- 
house accompanied by an invoice, and certifies on the invoice the re- 
ceipt of the goods. 

The warehouseman transmits the original invoice and memoran- 
dum to the Office of Indian Affairs, and ships the goods to the dis- 
bursing officer of a reservation. The original and memorandum bill 
of lading, accompanied by the copy of the invoice, are sent by mail 
to the superintendent. When the original invoice is received in the 
Office of Indian Affairs, it is briefed as a claim for settlement. When 
the authority is granted and the original thereof sent to the ware- 
houseman, a copy of this authority is filed in the claim section under 



64 BUSINESS AXD ACCOUNTING METHODS INDIAN BUREAU. 

the name of the school or agency for which the supplies are pur- 
chased. This claim section copy is used to note thereon the settle- 
ment of the claim when the claim has been examined and passed. 

The warehouseman has instructions to transmit the original au- 
thority with the original claim. Frequently the authorities embrace 
several claims. For this reason it is not possible to attach and trans- 
mit the original authority with each claim. 

The claim section copy constitutes the office record and, by regis- 
tering all claims which were passed under the one authority, pro- 
vides a check against duplication of payment. 

The method of settlement, indexing, recording, and filing is the 
same for all classes of claims. 

CLAIMS FOE ADVERTISING. 

The statute requires that all advertising claims shall be previously 
authorized by the head of the department. The Secretary of the 
Department of the Interior has delegated this power, within cer- 
tain limitations, to the Commissioner of Indian Affairs. Each 
advertising claim has as a basis an authority which is transmitted 
attached to the claim. 

In the Office of the Secretary there are on file advertising rates 
of the various papers. Each advertising claim is first sent to the 
Office of the Secretary with copies of the newspapers to show actual 
publication. The office checks the advertising claims against the 
advertising rates. The claims then are returned to the Office of 
Indian Affairs for designation of appropriations and formal settle- 
ment, which is made in the usual manner of settling claims. 

" BUILDING " CLAIMS. 

Building claims are submitted to the office from the contractors 
after being certified by the disbursing officer, superintendent, or 
agent, and usually by a building inspector. The certification of the 
building inspector, however, is not required on small jobs, because 
a special inspector is not always designated, and, in such instances, 
the disbursing officer is required to certify in both capacities. These 
claims are compared with contracts on file in the claims section, and 
are always transmitted directly to the Auditor for the Interior 
Department. 

When the contract which was approved by the Secretary is trans- 
mitted to the disbursing officer by the Education Division it has 
attached to it printed instructions which the disbursing officer is re- 
quired to follow when making his certification. 

" PUBLIC SCHOOLS " CLAIMS. 

This group of claims covers tuition of Indian pupils in public 
schools. Because of a recent decision of the comptroller, in which 
he held that payment for tuition of Indian pupils in public schools 
is not legal whenever the Indian is entitled by State law to attend 
a public school without special charge, there are now fewer claims 
of this class than formerly. 

Public school claims are usually supported by a report from the 
teacher of the school showing the names of the Indian pupils and 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 65 

the periods of their attendance. An examination of these claims is 
made difficult because the Auditor for the Interior Department 
requires that the reports shall show the date of entry, the actual 
days of attendance, and the days absent in such a manner that the 
attendance may be mathematically verified. The original of the 
report is attached to the claim and transmitted to the auditor. 

Mission boarding school claims are similar in character, and are 
handled in the same way as public-school claims. 

" TELEGRAPH " CLAIMS. 

The claim section verifies these claims only with regard to the 
appropriations against which the telegraph claim is to be charged, 
and in addition examines it to determine whether the telegram is 
a due and just charge against the Indian Service. The number of 
words and the rates charged are not verified by the claim section. 
These claims are transmitted directly to the auditor for settlement 
in order to avoid duplication of work. 

CLAIMS FOR " REFUNDS ON LAND." 

A number of Indian reservations have been in part opened to 
public settlement, which means that Indian lands are sold, the pro- 
ceeds from the sales being credited to the Indians. 

When entries of sale are canceled, the amount returned is accord- 
ingly charged to the proceeds fund. Such claims are received in the 
Office of Indian Affairs, after having received examination in the 
General Land Office. The examination which is given by the claims 
section only extends to the verification and designation of the fund 
to be charged, and the formal preparation of papers which are 
required in submitting the claim to the Auditor for the Interior 
Department. 

MISCELLANEOUS CLAIMS, " RECLAMATION SERVICE." 

The Reclamation Service has been performing considerable con- 
struction work on irrigation projects for the Indian Service. The 
amounts expended are reimbursable monthly on vouchers to the 
Reclamation Service from funds of the Office of Indian Affairs. 
After these claims and vouchers are given proper administrative 
approval and examination, they are transmitted to the Auditor for 
the Interior Department for settlement. The settlement of these 
claims is made by transfer of funds. The claim section does not 
verify in detail the charges of the Reclamation Service, but with 
each statement there is a detail record supplied. 

" GEOLOGICAL SURVEY " CLAIMS. 

The Geological Survey service makes investigations on behalf of 
the Indian Service. This class of claims involves small sums and 
usually is accompanied by vouchers approved and showing items 
charged for. The settlement of these claims is made through the 
Auditor for the Interior Department by a transfer of funds from 
the Office of Indian Affairs to the Geological Survey service. 



66 BUSINESS AND ACCOUNTING METHODS INDIAN BUEEAU. 

CLAIMS FOR " TRANSFERS OF SUPPLIES." 

When supplies are purchased for the Indian schools, it occasionally 
happens that one school receives supplies in excess of its needs. In 
such an instance, a transfer is made of the supplies to another Indian 
school or agency. This transfer is made and is accompanied by a 
transfer voucher and claim. If the transfer involves a transfer of 
supplies from one school to another, payment for which would have 
been made in any event from the same appropriation, the transfer 
is made by vouchers only. When, however, the transfer of supplies 
made involves a charge against a different appropriation, the voucher 
is treated as a claim and requires administrative examination, and 
must be presented to the Auditor for the Interior Department for 
settlement. The settlement consists of a transfer from one appro- 
priation to another. 

CLAIMS FOR " TRAVELING EXPENSES." 

Traveling expenses constitute another form of the miscellaneous 
claims. There are regulations covering traveling expenses. The 
regulations cover: 

1. General provisions: 

a. What authority required. 
&. Headquarters. 

c. Route. 

d. Actual expenses. 

e. Per diem in lieu of subsistence. 

2. Evidence of expenditures. 

3. What items constitute allowable traveling expenses : 

a. Transportation and expenses incidental thereto. 
6. Subsistence and expenses incidental thereto. 
c. Miscellaneous expenses. 

The preparation of traveling-expense claims is precisely the same 
as that of any other supply claims. Their examination is made more 
difficult because the regulations are not carefully followed. 

ANNUITY AND TRUST-FUND CLAIMS. 

The trust- fund claims are for shares of tribal funds. The amount 
of the trust funds of the several tribes is determined from book 
records, and these funds and the amounts allowed to the individuals 
are calculated from ledgers and rolls which show the total number 
of Indians living and entitled to participate in the funds at any 
time. 

When a fund has been segregated by law and the amount due 
apportioned to each Indian, a book record of each Indian's share is 
made. If such action has not been taken, then the calculation of the 
amount due in the principal fund has to be made at least annually — ■ 
sometimes oftener. The calculation is always based on the last 
annuity roll showing the number of Indians living and individuals 
entitled to participate in the fund for that year. The claims for 
annuity and trust funds are handled in the same manner as the 
supply claims, with the exception that there is no contract against 
which to check the correctness of the claims. Generally the claim 
is for back annuity, which shows the amount is clue and unpaid on 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 67 

a prior roll. The claim is checked against this roll. If the claim is 
found to be correct, it is marked off on the roll to show that the 
claim has been settled. The record of the claims section is made to 
show that the claim is settled and the index which is maintained 
under the Indian's name and under the claim number or serial 
number is marked accordingly. 

Sioux benefit claims form a large portion of this group of claims. 
These claims may be paid in cash or partly in cash and partly in 
property. 

RAILROAD AND EXPENSE CLAIMS. 

Bills of lading support freight claims. The bills of lading are 
signed by officials who ship the supplies and by officials who receive 
them. Bills of lading indicate that the shipment was for the Gov- 
ernment, and indicate points from and to which the supplies were 
shipped with the items and quantities. The examiner checks the 
memorandum bill of lading which was transmitted to the Office of 
Indian Affairs by the disbursing officer against the original bill of 
lading, in order to determine shortages if they have occurred. 

After checking the original bill of lading, all papers relating to 
the freight claim are passed to the examiner for administrative 
examination. This consists of an examination of railroad bills. In 
this examination the examiner determines whether the items are 
properly classified, that proper deductions have been made, and that 
the rates are correct. The examiner is not required to verify com- 
putations, extensions, and additions. This latter examination and 
verification has been permitted by express agreement with the 
auditor's office in order to obviate duplication of work. 



PART II.— CONDITIONS WHICH SUGGEST DESIRABILITY FOR 

CHANGE. 

CHAPTER IX. 

Defects in Organization. 

Chapter II of this report contains a general description of the or- 
ganization of the Office of Indian Affairs. A detailed description 
which goes down to each employee or group of employees in their 
working relations is shown as Appendix 2. These are submitted as 
statements of fact. The purpose of this chapter is to place before 
the Committee on Indian Affairs and other officers who may be 
interested an opinion on or appraisement of the defects in the present 
organization, so far as they relate to the business or trusteeship side 
of the problem. To make clear the scope of this criticism, it is re- 
peated that this report does not attempt to deal with the problem of 
personal guardianship except as an incident to the business problem 
of trusteeship for funds and properties. 

What are conceived to be the defects in organization for purposes 
of administration of the Indian estate are discussed under the fol- 
lowing general heads : 

1. Defects due to failure to distinguish functions of "guardian- 
ship " from functions of " trusteeship." 

2. Defects due to failure to distinguish functions of the "line" 
from functions of the " staff " in organization for the administration 
of Indian trusts. 

DEFECTS DUE TO FAILURE TO DISTINGUISH FUNCTIONS OF GUARDIANSHIP 
FROM FUNCTIONS OF TRUSTEESHIP. 

In this relation the fact may again be stated that the Government 
acts in a dual capacity, viz : 

1. As guardian or sponsor for the personal safety, education, 
health, and well-being of the Inidan, who has had his hunting 
ground taken away from him and who is regarded as a ward, while 
in process of adaptation to the ways and purposes of what to him is 
a new civilization. 

2. As trustee — or possessor of funds and properties belonging to 
the Indian or appropriated and held for his benefit and which are to 
be administered with all of the care and conservatism of a trust 
estate. 

The Indian Service is made up of agents of a government who have 
been appointed to perform these two functions. It is to considera- 
tions of the organization of personal alignment of these agents that 
attention is here given. 



68 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



69 



GOVERNING PRINCIPLE IN ORGANIZATION. 

In establishing a norm or standard for judgment as to whether the 
present organization is adapted to the performance of the two func- 
tions of "guardianship" and "trusteeship," it is urged as a first 
premise that neither of them can be most efficiently performed unless 
there is a clear division of responsibility on functional lines. 

The primary inducement to collusion, fraud, and subversion lies, 
in the relation of " trusteeship " and not in the relation of " guar- 
dianship." The relation of guardianship, however, suffers whenever 
the trusteeship is impaired. The possession of the Indian estate, the 
power to contract for the Indian, the power to dispose of his moneys 
and properties — on the one hand — and the ever present desire of the 
Indian's white neighbor to make these moneys and properties his 
own — on the other hand — these are conditions that have operated 
continuously in the past to impair the Indian Service. 

ADVANTAGES TO BE GAINED THROUGH SEPARATION. 

The exercise of the function of guardianship should be placed on 
a plane such as will admit of the development of this branch of the 
service to the highest degree of efficiency. The considerations in- 
volved in this guardianship are primarily professional matters — 
those of education, health, and morality. There is the same reason for 
relieving the professional side of the Indian Service from both the 
details of property control and from the inducement to neglect educa- 
tion, health, and morality, that there is in a hospital or an educa- 
tional institution. The teacher and the . physician should be freed 
from business considerations in order that they may give their atten- 
tion to the human side of the problem. In dealing with this phase 
of the problem the teacher and the physician should be unhampered 
to express the need of the Indians for funds and for changes in 
property relations. If those who are charged with the education, 
health, and morality of the Indian are responsible only for requisi- 
tioning or requesting funds when needed and are not responsible for 
the funding and the proprietary side of the problem, they (on 
account of their interest in the human side) will constitute an inde- 
pendent force to prevent the improper use of funds and properties. 
When, however, these two responsibilities are mixed, even though 
the highest ideals of trusteeship may prevail, there is less oppor- 
tunity and less incentive" to develop the professional side. 

On the other hand, there is a clear advantage in having the agents 
of " trusteeship " a distinct group. The requisitions of the teacher 
and the physician, in their capacity of guardian — as an agent of the 
Government — should be drawn in such form and supported in such 
manner as to convince the disbursing officer and the auditor, in their 
capacity as trustee. Since the purpose of disbursement or change in 
the form of the estimate is for the benefit of the ward, the trustee 
should not be permitted to disburse or to alienate property except on 
approved requisitions or requests of the guardian. With these re- 
lations established, both the opportunity to develop a high degree of 
efficiency will be provided for and the inducement to infidelity in 
trusteeship will be removed. 



TO 



BUSINESS AXD ACCOUNTING METHODS INDIAN BUREAU. 



DISTINCTION NOT MADE IN PRESENT ORGANIZATION. 

These are distinctions which have not been made or accepted as a 
principle of organization. In fact, there is in the present organiza- 
tion no clear definition of responsibility along functional lines except 
among the most remote subordinates. For example, the Indian 
superintendent is czar within the territorial jurisdiction prescribed 
for him. He is ex officio both guardian and trustee. In both of 
these capacities he acts while deciding what is needed for the Indian 
and while disbursing funds. In each of the agencies there are from 
one to five clerks who devote their attention to the business side of 
the problem, besides teachers, physicians, and various other persons 
who are devoting their attention to the Indian as human being. 
These clerks who are charged with business functions have such 
titles as " clerk," " financial clerk," " property clerk," etc. ; but all of 
them are subordinates of the superintendent or disbursing officer, 
who also has under him the various specialized agents who look after 
the Indian as ward. It would not, therefore, increase the number 
of the personnel employed. It would not in any manner increase the 
pay-roll cost of running the business to have the lines of responsi- 
bility which reach to these two kinds of problems a matter of sepa- 
rate organization. 

The same observation may be made with respect to the office at 
Washington. Here there is no clear functional distinction along 
lines of " trusteeship " and " guardianship." In certain administra- 
tive divisions there is an approximation to such an organization; in 
others, both functions are thoroughly mixed and confused. The 
point which is here emphasized is that the principle as such has not 
been a controlling one in determining how the various administra- 
tive divisions of the Indian Office will be organized or what will be 
the manner of alignment in order to make each the most effective. 
On the contrary, most of these divisions have simply grown up and 
have performed such duties or activities as may have been acquired 
or assigned, even carrying with them names that are not descriptive 
of the work that is now being done — as in the case of the division of 
•'education" that has under it not only education, but also health, 
law and order, field appointments, industries, supplies and construc- 
tion, and warehouses. In other words, it is the central business 
organization. 

DEFECTS DUE TO FAILURE TO DISTINGUISH FUNCTIONS OF THE " LINE " 
FROM FUNCTIONS OF THE " STAFF " IN THE ADMINISTRATION OF 
TRUSTEE. 

In the administration of a trust estate somebody must have pos- 
session of the funds and properties held in trust: somebody must 
receive and disburse moneys ; somebody must be held accountable for 
transactions involving the exercise of business discretion or account- 
ability for the properties which are held and which are to be used 
for the benefit of what is known as the cestui que trust. In order that 
the acts of those responsible for conducting business transactions 
may be reviewed, for the purpose of determining whether the terms 
and conditions of the trust have been complied with, it is desirable 
to have their acts scrutinized by persons who have no responsibility 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 71 

either for possession of the funds and properties or for the exercise 
of discretion in the conduct of the business. That is, persons who 
belong to a " staff " organization should scrutinize the acts and 
accounts of those who in the " line " of duty carry on the business. 
The difference in responsibility of the one who is called on to conduct 
the business and the one who is called on to report on his acts is a 
difference that is of highest administrative importance. As a matter 
of organization, the " line " or hierarchy of personnel who are re- 
sponsible for executing orders should be kept absolutely distinct from 
the " staff " or group established with a view of keeping the execu- 
tive informed with respect to the manner in which these orders have 
been executed. 

As related to the discharge of the trust activities of the Indian 
Service the disbursing officer, the property clerk, the financial clerk, 
the storekeeper, would be men of the " line," while the auditor, the 
inspector, the special agent asked to report on the transaction of 
agents would constitute the " staff." These are distinctions which 
have not been kept in mind in organizing the business or trust side 
of the Indian Office. 

CONDITIONS ADVERSE TO THE DEVELOPMENT OF INDIVIDUAL EFFICIENCY. 

Aside from the defects in the general plan and principle of organi- 
zation which have been discussed, attention should also be called to 
the conditions which are adverse to the development of individual 
efficiency in the service. These adverse conditions are of two classes : 

1. The political considerations still dominant. 

2. The lack of opportunity given to the personnel for the develop- 
ment of a career. 

POLITICAL CONSIDERATIONS STILL DOMINANT. 

In the past the greatest improvement ivhich has been made in the 
organization and personnel of the Indian Office has been accom- 
plished through taking a large part of it " out of politics." Although 
the Indian Service is primarily a trusteeship and is one which should 
nave been kept entirely free from the " spoils system," like many 
other of the National Government relations whose functions are 
peculiarly sacred, this, for decades, was one of the largest fields for 
political plunder. During and immediately following the Civil War, 
the conduct of the office became so scandalous as to call for special 
action on the part of President Grant looking toward a bet'ter man- 
agement and control. It was with this primarily in view that he 
attempted to organize a staff from the disinterested representatives 
of such organizations as the Friends' Society and the leading 
churches. The Indian Service was one of the first to be placed under 
civil-service regulations and at the present time a very large part of 
it is under the indirect control of the President, through the Civil 
Service Commission, instead of being made up of job hunters who 
receive their appointments as a reward for partisan activity or for 
other personal and selfish ends. 

The crief executive positions, however, are still the subject of 
political influence. This, without question, should be changed. 



72 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



There is absolutely no sound argument supporting partisan ap- 
pointments to a service which should be highly professional or spe- 
cialized in character and which has for its purpose dealing with 
questions of guardianship and trusteeship. 

But, aside from these large and broadly human questions, there is a 
reason and self-interest which should stimulate the white man in 
his efforts to care for the Indian on the human side. Without 
the exercise of strict guardianship the Indian is a danger to the 
whole white population. While the number of Indians has not 
been large as compared with the total number of white persons 
within the United States (only about one-third of 1 per cent), it 
is scattered over 24 States, comprising three-fifths of the territorial 
area of the United States. Without strict surveillance over the 
physical well-being and morality of the 300,000 wards of the Gov- 
ernment each would be a center of infection from which trachoma, 
tuberculosis, and other contagious and infectious diseases may spread 
to the 10,000,000 people with whom they directly or indirectly come 
in contact during a year. An organization to discharge the duties 
of a guardianship of this kind should not be compromised by any 
of the motives which dominate partisan control or what is known 
as " patronage." 

LACK OF OPPORTUNITY GIVEN TO THE PERSONNEL. 

Mention has already been made of the fact that the Indian Serv- 
ice is divided up into small cross sections or units of organization 
that have fixed upon it a personnel that is practically unchanging 
or which changes with very great difficulty, due to the present 
method of appropriation and control over the personnel by an ir- 
responsible committee or committees of Congress. If, on the other 
hand, positions in the Indian Service are classified in such manner 
as persons doing similar work or performing similar services are 
given an opportunity that would be service-wide; if, furthermore, 
each of these varying services were grouped so that the kinds of work 
might be specialized with respect to the grades of experience or 
efficiency that are required and these grades as compensation for 
work within each of these grades, a graduated salary rate might 
be established. And, if, in addition to this, some method were 
provided which would enable those in charge of the service and 
the Civil Service Commission to rate persons on the basis of merit 
or individual efficiency developed, the continuing inducement for 
each man in the service would be to become more efficient. The 
espirit de corps of the service would be improved. Men who are 
now depressed and without hope, having continued for years with- 
out promotion, would have a new outlook and would feel a new 
interest in this highly specialized work of the Government. These 
are factors which should be taken into consideration in any plan 
for the reorganization of the Indian Service and for placing it 
on such a basis as would be adapted to discharging the obligations 
of the Government, acting in the capacity of guardian for the 
health, comfort, and welfare of the Indian, on the one side, and in 
the capacity of trustee for his funds and properties, on the other. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



73 



CHAPTEE X. 

Defects in Methods of Doing Business. 

For the purpose of this report, criticism of the minutia of busi- 
ness does not seem to be called for. There are certain general 
characteristics of method, however, which should be considered. 
Among these are the following : 

(1) Methods of making* appropriations. 

(2) Methods of allotment of funds. 

(3) Methods of inspection. 

(4) Methods of purchasing. 

DEFECTS IN METHODS OF MAKING APPROPRIATIONS. 

The present methods of preparing estimates and submitting requi- 
sitions for appropriations have been described in Chapter III. The 
appropriations as made are not determined by any uniform principle 
of analysis or control. The major part of the funds granted by 
Congress annually are subdivided or itemized by functions or activi- 
ties — that is, each amount is appropriated for a kind of work to be 
done, not by any particular Indian agency but by all agencies, as for 
example : 

For surveys, resurveys, classifications, appraisement and allotment 
of land in severalty, under the provisions of the act of February 
8, 1897, etc $250,000 

Or, again: 

For the construction, repair, and maintenance of ditches, reservoirs, 
and dams, purchase and use of irrigation tools and appliances, water 
rights, ditches, lands necessary for canals, pipes lines, etc $35,700 

Or, again: 

For support of Indian day and industrial schools and other educa- 
tional purposes not specifically provided for herein, etc $1,420,000 

What may be called the general appropriations for functions are 
left to the administration to allot to each of the several agencies. 
Each of these appropriations are subdivided by the board of esti- 
mate and apportionment after they have been fixed by Congress. 

A part, smaller in amount but greater in number of items, of the 
annual appropriations, however, is subdivided on geographical lines 
as, for example : 



Montana : 

Support of Indians of Fort Belknap(?) Agency $20,000 

Support of Indians of Flathead Agency 9,000 

Support of Indians of Fort Peck Agency 35,000 

Milk River irrigation system, Fort Belknap Agency ( reimbursable) „ 15,000 

Irrigation system of Fathead Reservation (reimbursable) 200,000 

Irrigation system, Blackfeet Reservation (reimbursable) 100,000 

Irrigation system, Fort Peck (reimbursable) 100,000 

Fulfilling treaties with Crows 6.000 

Support of Northern and Arapahoe Indians (fulfilling agreement)- 85,000 

Line riders, North Cheyenne Reservation 1,500 

Purchase of stock, cattle for Northern Cheyennes (reimbursable)— 100,000 

Support of Rocky Boys Band of Chippewas 10,000 

Civilization, etc.. Fort Peck Indians (reimbursable) 100,000 



74 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

Appropriations of this kind do not need to be allotted by the ad- 
ministration. They are distributed by Congress itself. And this 
fact brings out one of the defects in method. The purpose of an 
appropriation is to enable the executive and legislative branches of 
the Government to exercise control — 

1. Over the contracting and purchasing relations of governmental 
agents and subordinates, including the purchase of personal serv- 
ices, supplies, materials and equipment ; the payment under contract 
for construction and repairs and other services not personal in 
character. 

2. To exercise control over questions of policy. / 

Neither of these purposes is adequately served by the form of the 
Indian money grants. That is, any attempt on the part of Con- 
gress to establish a list of salaries which is localized to superin- 
tendencies and administrative subordinates, as is at present done, 
does not operate to control the contracting for personal services. 
It only fixes these relations and throws on Congress the exercise of 
a form of discretion that can be intelligently exercised by the admin- 
istratives alone. Furthermore, such a method precludes the work- 
ing out in the service of a plan of promotions and salary adaptations 
corresponding with the kinds of work to be done and the efficiency 
of those employed. By this method not only is any attempt at 
developing a service-wide opportunity for the efficient employee 
defeated, but, generally speaking, each employee is limited both in 
his experience and his opportunity to a single office or superin- 
tendency. The method at present employed makes the personnel 
dependent on the good will of an irresponsible congressional com- 
mittee or the use of political influence rather than the subject of 
discipline administered under general administrative law and regu- 
lation. From every point of view the present method of appropria- 
tion is defective. The items of appropriation are not of a character 
to provide for the exercise of legislative and executive control over 
the contracting and purchasing relations, for the reason that the 
primary classification is by functions or kinds of work to be done 
rather than the kinds of services or things to be purchased ; in so far 
as control over contracting relations is provided for, it is in the 
schedules of items such as salaries and wages attached, and these are 
in such a form as to hamper the service and preclude the utilization 
of administrative discretion and the development of efficiency. 

Again, it does not provide for settling questions of policy. This 
purpose is defeated, first, because the items are now classified in 
such manner that the administrator may change a particular voucher 
to any one of two to a dozen accounts as may suit; second, because 
it does not establish the conditions or provisions controlling allot- 
ments with a view to fixing executive responsibility for the exercise 
of proper discretion. Furthermore, the present system of appro- 
priations is such as to make the administration unnecessarily expen- 
sive, as under the present practice the Indian office is required to 
carry many times more appropriation accounts than are needed for 
purposes of financial control, and it undertakes to do the impossible 
by attempting to enforce the control over cost data through appro- 
priation charges. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 75 
DEFECTS IN METHODS OF ALLOTMENT. 

The methods of allotment are defective in that the laws or condi- 
tions attached to appropriations governing allotments have not been 
worked out with a view to exercise of control over the efficiency 
and economy of conducting an Indian service. Again, they are 
defective in that the allotments are set up arbitrarily in the central 
office after the appropriations have been fixed, without adequate 
data and without obtaining from those responsible for the work 
in the field expert opinion as a basis for the apportionment. In 
other words, as shown in the description of the allotment system, 
the central office relies largely on the " rule of thumb " judgment or 
impressions of persons who are not responsible for or in touch with 
details of the transactions of the agencies to determine the allotments 
and then makes no provision for using cost data either for purposes 
of review or readjustment. The whole process comes to be one 
of personal equation or customary practice rather than one of action 
based on data which may be used as a guide to current judgment. 
Both the principle of control over purchasing relations and of con- 
trol over the efficiency of management would be made more effective 
in case the appropriations ran according to the character of the con- 
tracting relations or classes of things to be bought, rather than by 
functions. For example, let us assume that the appropriations 
carried some such items as the following : 



For personal services $000, 000, 000 

For purchase of services other than personal 000, 000, 000 

For purchase of supplies 000,000,000 

For purchase of materials 000,000,000 

For purchase of equipment 000, 000, 000 

For construction, etc 000, 000, 000 



Assuming that these appropriations were based on estimates that 
where supported by actuarial data produced through the accounts of 
the various agencies, the amount of the annual need for funds would- 
be settled after considering quantities, prices, and estimates of things 
required for proposed work to be done. Congress having set up the 
amount available for personal services, the use of that could be 
controlled by a list of positions, grades, and salary rates authorized 
for the service which would support the total amount of appropria- 
tions for personal services. 

Then, instead of attempting to decide on the number of clerks at 
$720 who could be employed at the Rosebud Agency, the question 
of the use of the positions, salaries, and grades established, and the 
promotions and demotions, etc., could be left to administrative 
determination. 

The purchases of services, other than personal, might be condi- 
tioned by general rules governing such matters as transportation 
services, telegraph and telephone service, postage, etc. The amount 
appropriated for materials, supplies and equipment could be condi- 
tioned by provisions requiring definite specifications in so far as 
these might be set up by some designated office which would be 
authorized to establish them, etc. The functional use of these 
services and things could then be controlled through allotments 
and cost accounts that would give both to administrators and to 
Congress a strict account in terms of standards of economy and 



7 6 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

efficienc}^. This could be done through prescribing some such con- 
ditions as the following: 

That after the amounts of the annual appropriations shall have 
been made, and not later than July 1 of each year, the head of each 
administrative division shall submit to the Commissioner of Indian 
Affairs a request for allotments in accordance with the classification 
of functions or kinds of work to be carried on, set forth in the 
requests for appropriations, which requests for allotments shall 
carry with them estimates of the number of persons required, their 
positions, service grades, and salary rates, and of the kinds of 
materials, supplies, equipment, and services, other than personal, 
with the estimated amounts required for each, which estimates shall 
be summarized by the board of estimate and apportionment and 
resubmitted to the Indian Commissioner with its* recommendations. 
And the Indian Commissioner, subject to the approval of the Sec- 
retary of the Interior, shall allot the total amount appropriated, 
setting forth in the order of allotment, the amount which may be 
spent for each function, activity, or work process to be carried on 
(or shall designate what amount of the total amount appropriated 
shall be held in reserve for future allotment), which allotments, 
when approved by the Secretary of the Interior, shall constitute an 
authorization to carry on the several functions, activities, and work 
processes; and no pay roll shall be paid, and no voucher shall be 
approved for payment, until such allotment shall have been made. 

That accounts shall be kept with each item of appropriation show- 
ing the original amount appropriated; the credits or reimburse- 
ments during the year; the encumbrances, such as contracts and 
open-market orders entered into payable therefrom; the unencum- 
bered balance; the pay rolls or vouchers drawn; the balance subject 
to voucher ; the advances from the Treasury ; and the balance remain- 
ing subject to requisition. 

That accounts shall be kept with each item of allotment for func- 
tions, activities, and work processes, showing the cost of personal 
services, the cost of materials, supplies, equipment, services other 
than personal, and other costs, which accounts shall be charged from 
the time records, deliveries from stores, invoices for direct deliveries, 
and other documents or registered totals of documents from which 
exact cost of work may be determined. And standard detail ex- 
pense and cash accounts shall be installed in each superintendency or 
office which shall be kept under the control of the allotment accounts 
at the central office. 

That each office in which accounts are kept shall submit a report 
showing the expenses and cost of work monthly, which report shall 
be audited and reconciled with the controlling allotment accounts 
in the central office. 

DEFECTS IN METHODS OF INSPECTION. 

Efficiency in administration depends in no small measure on the 
ability of those at the head of the administrative " line " utilizing a 
"staff" for the purpose of independent review and report on the 
acts and results obtained by subordinates. An effective inspection 
corps or " staff " must (1) be so organized that it will not be respon- 
sible for any of the acts or results reported on; (2) report review- 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 77 

able facts from which conclusions may be drawn. The inspection 
service is lacking in both of these essentials. It is not entirely re- 
lieved from line responsibility; on the contrary, responsibility is at 
times much confused and an adverse report would be self-condem- 
nation. It has not developed any systematic method of reporting 
facts and conditions. Unless a special report is requested, an inspec- 
tor or special agent who goes to a superintendency reports on such 
subjects and in such form , as he may see fit, and these reports are 
usually in the nature of conclusions reached by the inspector rather 
than evident or reviewable facts. For example, an inspector may re- 
port that a schoolhouse is in an insanitary condition. There is no 
form provided on which he is to report the facts and conditions that 
would lay the foundation for judgment as to whether a schoolhouse 
is sanitary or insanitary. Inspection has not been reduced to a for- 
mal itemization of the points to be observed. A score card might be 
devised for each subject of report on each reservation. This has not 
been done. Therefore, the central office must rely on the judgment 
of the man in the field and blindly support him. 

Not only does this method stand in the way of the exercise of 
executive discretion and force the management into a bureaucracy, 
but the benefits of inspection are largely destroyed so far as they 
may be utilized in the development of individual efficiency. If in- 
stead of reporting that the schoolroom at the He Dog day school was 
in an insanitary condition the report were in the form of a score 
card with collateral explanatory remarks, the report would put 
both the inspector and the inspected to the test of reviewable state- 
ments of fact. In case the inspector failed to make certain observa- 
tions required, it would be discovered and he could be held respon- 
sible. If he made them and did not report accurately, this would 
be found out. Any error in statement of fact would ultimately react 
on the inspector, for in case it reflected on the superintendent, he 
would join issue, while if it were undeservingly favorable to him, 
subsequent inspection by another person would develop this fact* 
The method of inspection is as crude as it is unsystematic. Before 
this branch of the service performs its part it must be rebuilt from 
the bottom up. 

DEFECTS IN METHODS OF PURCHASING. 

Without going into the results obtained in making purchases, the 
methods themselves condemn the service. 

In the first place, the contracts are made under conditions which 
stand in the way of getting best results. They are made under stress 
of time limitations and uncertainty as to amounts to be appro- 
priated on estimates submitted before the appropriations are settled. 
In the second place, methods of purchase and distribution are tied 
up in red tape to such an extent that in many instances the cost to 
the Government is unnecessarily increased. In the third place, the 
methods of custodianship are such that there is no way of deter- 
mining whether things purchased serve the use intended. The stores 
and property accounting is only a paper record. 

As against the present methods, with millions of funds due to the 
Indians, it would be only businesslike to make available a fund for 

74564—15 6 



78 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

purchases and stores balances that would not throw purchases into 
a state of confusion and would enable the Government, through its 
agents, to purchase as economically as any large corporation. 

There is no excuse for not developing a procedure both for pur- 
chases and stores and property accounting that would enable the 
Government to exercise control over custodianship. 

OTHER SUBJECTS OF COMMENT. 

There are many other subjects of business method which might be 
made the subject of comment. It does not seem necessary, however, 
at this time to do more than to give, by way of illustration, evidence 
of need for far-reaching revision, the details of which should be 
worked out when the constructive side is entered upon. 



CHAPTEE XI. 

Defects in Methods of Accounting and Reporting. 

The Office of Indian Affairs, whose volume of business runs to 
many million dollars each year and whose trusteeship includes the 
custody and control of approximately a thousand million dollars, 
worth of property, is equipped with records so inadequate as not only 
to imperil the rights of those for whose benefit these funds and prop- 
erties are held, but to leave the administrator himself without pro- 
tection. An accounting system is maintained which is single entry 
in principle. The accounts are partial and inaccurate in many par- 
ticulars. It is impossible with present methods for the officials of the 
Indian Office to keep in personal touch with the many varied trans- 
actions and the constantly changing status of property and funds. 

NO BALANCE SHEET. 

One of the primary essentials of a system of accounting records is 
that it will at all times make it possible to know what the persons for 
whom the accounts are kept own, and what they owe. Whatever else 
is kept or not kept, it should be possible to make a statement of assets 
and liabilities. The books of account maintained in the home office 
do not lend themselves to the preparation of a balance sheet. There 
is no way of preparing a statement which will show the financial 
condition of the various funds. There are no records from which 
can be obtained a true statement of revenues and expenses. There is 
no record maintained from which can be obtained a statement of the 
property and funds with which the Indian Office is charged. 

Some of the liabilities are known, but not all. The books are main- 
tained on a basis of cash received and cash disbursed. A record of 
disbursements can not show what amounts should be paid. A record 
of receipts can not show what amounts should be collected. There is 
only one set of books which admits of being balanced and proved as 
to accuracy of clerical work. These books are the appropriation 
ledgers. But the appropriation ledgers do not show the true condi- 
tion of appropriations; they are not maintained in such form as to 
be checked with Treasury balances. 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 79 

It goes without saying that the accounting system as it is main- 
tained to-day in the central office is totally inadequate. The many 
ledgers and records which are maintained are the result of practices 
which have been handed down during a long period. Some innova- 
tions have been made in recent years, but what is needed is a sys- 
tematic overhauling. 

DEFECTS OF THE GENERAL APPROPRIATION LEDGERS. 

Trial balances are not taken from the subsidiary ledgers; nor are 
the ledgers and registers at present controlled as to their accuracy. 
The appropriation ledgers are in effect a duplicate of ledgers main- 
tained in the Treasury Department. The information which is re- 
corded in the general appropriation ledger is taken from statements 
which are supplied from the Treasury Department. No other infor- 
mation is added to them by the Treasury Department except segrega- 
tion of the Indian moneys, proceeds of labor, and a few others where 
more detail seems desirable. 

The present form of general appropriation ledger is made neces- 
sary by the present procedure; but, with a modified procedure, the 
work of keeping this ledger could easily be saved as the information 
could be developed on other records without additional cost. In the 
present form these records are quite separate and apart. They do 
not balance with any other accounts nor can they be proved to or 
used as a part of a scheme of information developed by other ledgers 
or records maintained in the finance division. Because the general 
appropriation ledger is kept on a basis of cash received by and ad- 
vanced from the Treasury, it does not and can not show encumbrances 
against the several funds. It does not show the balance subject to 
voucher, the unencumbered balance, or the reserve for contracts and 
open market orders. 

GENERAL APPORTIONMENT LEDGER. 

The general apportionment ledger is a record used for the purpose 
of showing the various appropriations as they are apportioned to 
the various disbursing officers. Some of the iarger appropriations 
are apportioned to as many as 150 different agencies and schools — in 
some instances as high as 15 apportionments are made from different 
appropriations for the same school or agency. This ledger in itself 
is not of much value, except for determining the balance of undis- 
tributed and unallotted funds remaining in the different appropria- 
tion accounts. The appropriation ledger is not balanced, and its 
accuracy depends entirely upon the accuracy and efficiency of the 
bookkeeper making the postings. It is not used throughout the year 
except when additional distribution is made from the various funds 
and appropriations still carrying an undistributed balance. 

LIABILITY LEDGERS. 

The term " liability ledgers " is a misnomer. The liability ledgers 
do not show outstanding liabilities nor do they show encumbrances 
against the appropriations. Into the liability ledgers are not entered 
amounts which have either been expended or incurred, but " authori- 



80 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



ties " to expend. By this means it is not possible to ascertain the 
amount still available for use in a given appropriation, but rather an 
amount to be assigned to the different disbursing officers for expendi- 
ture. 

It is not an uncommon occurrence to have certain expenditures 
authorized from an appropriation which the disbursing officer does not 
use for a considerable length of time and may not use at all : never- 
theless, the " liability ledger " will show an encumbrance against that 
appropriation as if there were no funds available. "Liability 
ledgers " as they are maintained to-day do not afford an opportunity 
of showing the disposition of each " authority." because the " authori- 
ties ? * issued are not balanced against " expenditures " and " sav- 
ings " reported subsequently. The liability ledgers and the method 
of posting into them do not permit of control, and the accuracy of 
the posting is entirely dependent upon the clerk who makes the 
posting. 

The " liability ledgers " are never balanced, and it is not at all an 
uncommon occurrence to find that the totals which are carried in 
pencil are incorrect. The ki liability ledger " is only a memorandum 
record, and unless modified and placed under control is a record 
which is of little value to an administrator of the Indian Office. 

COST LEDGERS. 

The term " cost ledgers " is also a misnomer. The cost ledgers 
do not show the cost of the Office of Indian Affairs, nor do they show 
accurately the cost of any portions of the service. The cost ledgers 
are only a record by which are analyzed the expenditures made 
by the field surveys and some expenditures of the home office. 

The analyses which the cost ledgers provide include the expendi- 
tures of disbursing officers, but they do not include the expenditures 
incident to the conduct of the business of the Indian Office in Wash- 
ington. 

With the exception of a few minor expenditures, all expenditures 
of the home office are provided and paid from the appropriation 
in the legislative bill. As a result, any summaries prepared under 
the various appropriations only partly represent the cost. 

The cost ledgers, as they are maintained to-day, are records which 
do not show accurately the expenditures made under the various ap- 
propriations. 

Although a very elaborate classification in the cost ledgers has 
been provided, the classification does not lend itself particularly 
well to the production of summaries which would state how much 
was expended for some of the major functions of the Indian Service. 

It is impossible to ascertain, without much labor and effort, the 
cost of health work in the various agencies, schools, etc. Likewise 
it is difficult to ascertain the cost of irrigation, of agriculture, of for- 
estry, because there is no definite classification by functions. Ex- 
penditures which clearly should be charged to one function are fre- 
quently charged to appropriations and accounts of a wholly differ- 
ent character, because the descriptions of appropriations are so 
broadly phrased as sometimes to seem all inclusive. 

Because the classification of the cost ledgers is not along functional 
lines, it is possible to ascertain the cost of certain functions only 



BUSINESS -AND ACCOUNTING METHODS INDIAN BUEEAU. 81 



after a long and tedious analysis. The fact that certain expendi- 
tures can be recorded in the cost ledgers under a number of appro- 
priations, the designation of which rests entirely with the examiners 
of the accounts section, prevents a possibility of establishing com- 
parative data which would produce figures the growth or diminu- 
tion of which would indicate a change requiring administrative 
attention. 

The cost ledgers are posted from " quarterly accounts " of dis-' 
bursing officers and " claims " which reach the cost clerk from the 
claims section. In entering quarterly accounts of disbursing offi- 
cers, the expenditures are charged against the appropriation accounts 
indicated by the disbursing officer. The accounts section examines 
the quarterly accounts, and in the course of its examination may find 
that the disbursing office has charged certain amounts against ap- 
propriations which are not applicable. The examiner of the ac- 
counts section notes on the abstract of disbursement the change or 
transfer to be made. This change is only a memorandum change, 
and does not become effective until the auditor's office of the 
Treasury Department passes upon it for examination. Therefore, 
it is quite frequently the case that the accounts section suggests 
changes and transfers, or disallows or allows items which subse- 
quently are approved or disapproved by the auditor's office. 

The cost ledger clerk makes postings in his cost ledgers from the 
memorandum statements which are corrected by the accounts sec- 
tion, and many statements are subsequently changed in the auditor's 
office. The auditor's office does not report to the cost clerk or to 
the Office of Indian Affairs the allowances or disallowances made 
by it, and, therefore, the cost ledgers are incorrect, because they do 
not take into account transfers from one account to another, or 
allowances or disallowances made by the auditor's office. 

Postings are also made in the cost ledgers from claims, and much 
care is given to the verification and accuracy of these postings by 
checking up any one or two accounts. It becomes very difficult to 
establish this check if the cost ledgers with regard to these accounts 
are not correct and accurate. When, at the end of the fiscal year, 
statements are prepared for congressional use, it is self-evident that 
figures which compose these statements are incorrect to the extent 
to which the cost ledgers are incorrect. 

An additional fact enters into the preparation of these summary 
statements. The fiscal year ends June 30, and the summary state- 
ments have to be completed by October, which leaves a very short 
time for entering up the expenditures under the last quarterly ac- 
counts of disbursing officers. Because of this fact, disbursing offi- 
cers frequently do not report in their last quarterly accounts all ex- 
penditures which should have been considered in that quarter, but 
carry them over to the next year's appropriation. This results in 
inaccuracy and a lack of control over disbursing officers. 

Still another factor enters into the method of posting the cost 
ledgers. The cost ledgers are so columnarized as to provide head- 
ings which do not lend themselves to a definite classification. It 
frequently occurs that an expenditure can be recorded equally well 
under two or more headings provided in the cost ledgers, and it 
therefore depends largely upon the judgment of the cost clerk to de- 



82 BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 

termine under which column the entry shall be made. He may 
enter the same kind of an expenditure under two different columns 
provided he does not definitely recall where the previous expendi- 
ture has been recorded. This condition likewise prevents a proper 
comparison with preceding years. 

" AUTHORITIES.'* 

The present method of issuing authorities, which grant to the 
disbursing officers and others of the Indian Service the right to 
expend money for purposes for which request has been made, is 
entirely inadequate and faulty. There is no definite procedure 
established by which it can be ascertained Avhat appropriation or 
fund must be encumbered with the. authorities when making certain 
purchases. 

It happens frequently that two authorities are requested for iden- 
tically the same items of expenditure at different times of the year 
or by different agents, and (because of the present inadequate 
method of issuing authorities) the two authorities will be charged 
against different appropriation accounts. The two or more appro- 
priations which are applicable under the present method of designa- 
tion of funds may be used entirely as seems best in the judgment of 
either the bookkeeper, the clerk in charge of authorities, or the 
chief of the Finance Division, the latter exercising final judgment 
where a designation of the appropriation seems incorrect. 

Aside from the fact that such a designation of funds from which 
expenditure shall be made is entirely unbusinesslike and unsatisfac- 
tory, a much more vital defect can be found in the fact that in des- 
ignating the fund from which expenditures are to be made, sched- 
ules of the estimates of needs for the fiscal year are not consulted. 
The disbursing officer prepares his schedules of estimates of needs 
and includes a given expenditure in an appropriation which he des- 
ignates in such estimates. When authorities are issued it is often a 
matter of judgment of the disbursing officer as to what appropriation 
is to be charged. 

When the allotment of funds is made at the time each disbursing 
officer is allotted a certain amount from the lump-sum appropria- 
tion, it is not specifically designated to what extent these estimates 
of needs haA^e been modified and which of the many expenditures 
contemplated have either been considered as unnecessary, or, if 
considered necessary, to which appropriation fund they have been 
transferred. It, therefore, occurs that the disbursing officer may 
make request for an authority from the appropriation under which 
he originally contemplated making the expenditure. When the 
authority is passed to the clerk after designation of fund, he may 
choose one of the many appropriations which are applicable. The 
authorities are registered in the liability ledger under the appropria- 
tion account before they have been approved by the acting com- 
missioner. 

It occurs, although not frequently, that an authority in the course 
of approval is canceled or disallowed, and no notice is given the 
Division of Finance of its cancellation. As a result, there remains 
an encumbrance against the appropriation with regard to this 
specific authority, whereas in reality no such authority is out- 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



83 



standing. This has a two-fold effect. It prevents the Indian Office 
from charging other authorities which are applicable under this 
appropriation to this allotment, and it leaves the amount of money 
idle when it could be used for other purposes. 

Authorities are not liquidated in the liability ledgers. They stand 
as an encumbrance against the specific appropriation on the liability 
ledgers. The reports, both " quarterly accounts " and " savings," 
are not entered in the liability ledgers in cancellation of an au- 
thority. As a result the status of the different authorities can not 
be ascertained Avith regard to the amount expended from an au- 
thority, or the amount which still remains unexpended in the hands 
of a disbursing officer. 

REQUISITION FOR FUNDS. 

Under the regulations of the Office of Indian Affairs, the requisi- 
tion clerk is permitted to send out amounts on requisition from a 
disbursing officer not in excess of his bond and not in excess of the 
amount of authorities previously granted. The clerk has to guide 
himself entirely by records of the Finance Division. 

Because of the present method of bookkeeping, the liability ledgers 
are not accurate and frequently do not state the facts. 

It has occurred that authorities requested, although subsequently 
canceled or not approved, have been entered upon the liability 
ledgers as encumbrances against the appropriation, and the requi- 
sition clerk, assuming that the registration in the liability ledger is 
that of authorities granted, has issued funds against these registered 
authorities. It is true that the disbursing officer, according to 
present regulations, could not use this sum advanced to him on 
requisition until he obtained an authority, but the fact remains that 
the system permits issuing funds upon requisition without proper 
authority being granted. 

NO CONTROL OVER PROPERTY ACCOUNTS. 

Through " property return " the Office of Indian Affairs is given 
notice that disbursing officers have received and are accounting for 
supplies and articles. The property returns as prepared to-day 
are not well adapted to a proper and adequate check. The amount 
of property remaining on hand at the close of one quarter is not 
checked with the property returns for the next succeeding quarter. 
A check of one return with another is only made when it is a re- 
turn under a bond or a fiscal return of the disbursing officer. This, 
however, is done only because it is required that the final return of a 
disbursing officer must have attached to it the receipt of the dis- 
bursing officer's successor. 

At no time, not even at the time Avhen one disbursing agent is 
replaced by another, is there an inventory taken under the super- 
vision of the Indian Office. Occasionally this is done by one or 
both men interested, but not officially. There is no way provided 
by which the Indian Office can determine that the incoming dis- 
bursing officer has actually received all that he has signed for 
and that the outgoing official has actually turned over all the prop- 
erty to his successor. 



84 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



It would be an almost impossible task to verify the statements 
which accompany the final property return after a few weeks had 
elapsed. That this fact has been known to the administrators of the 
Office of Indian Affairs can be seen from the following paragraph, 
which is an abstract from a letter written over the name of R. G. 
Valentine, Commissioner of Indian Affairs : 

* * * Having long realized that the present property accounts are 
almost worthless from an administrative point of view, and that consequently 
spending much time on them is wasted, and whereas we have already begun 
to install a system of accounts that will mean something, I make this 
order * * *. 

Although this order states that a new installation of a system of 
accounts was begun, little or no progress has been made in this line 
since 1911, and for all practical purposes the property accounts and 
the system used now are nearly the same. 

QUARTERLY ACCOUNTS. 

The accounting section of the Finance Division and the office of 
the Auditor for the Interior Department perform to a large extent 
the same kind of an examination. This produces a duplication of 
work on many points. It requires a double force, and such force 
has to pass over the various items in rather a superficial manner, 
because of the volume of work involved in the examination. The 
account section checks carefully these accounts. 

The quality of this audit and checking largely depends upon the 
quantity of work on hand, and when the volume is so great that 
the clerks become overburdened, the account section is forced to 
make a rather hurried examination of these accounts. The exam- 
iners have no right to allow or disallow any items or amounts stated 
in the reports. The examiners have the right only to question the 
propriety or impropriety of certain charges. They are not per- 
mitted to suspend, disallow, change, transfer, or make any alteration 
on the original quarterly return. If there are any items that seem 
to be incorrect, the account section may criticize by making notes 
and preparing a letter of advice to the disbursing agent to this 
effect. 

It is left entirely to the auditor to determine whether the ques- 
tions raised are just. The auditors may agree with the opinion 
of the account section and they may totally ignore the suggestions 
made. 

With the exception of possibly such additional decords and infor- 
mation as the personal record of employees and their salaries, and 
some other minor records which the Indian Office possesses and 
which the auditor's office does not have, the original records are used 
for auditing purposes in the above places. Therefore it would seem 
to be true that much of the work is being duplicated. There is 
duplication of work on nearly every item of every statement, with 
the exception of items relating to individual Indian money accounts. 

There is at present not sufficient authority vested in the examiners 
of quarterly accounts of the Finance Division, and there is a marked 
lack of cooperation between the auditor's office and the Finance Di- 
vision. The latter particularly shows itself in the fact that fre- 
quently the auditor's office adjusts quarterly accounts and does not 



BUSINESS AND ACCOUNTING METHODS INDIAN BUREAU. 



85 



report these changes to the Finance Division. This in itself has an 
effect on the cost ledgers, the liability ledgers, and the records which 
are maintained in the office for keeping a distinct check upon 
authorities granted and moneys expended therefrom. 

LACK OF UNIFORMITY". 

There is no prescribed accounting method which the disbursing 
officers are required to follow. Generally speaking, each disbursing 
officer may maintain any books of account he may choose. 

Certain books of account have been presented by the comptroller 
which each disbursing officer must keep. However, the procedure in 
keeping these books of account is not definitely regulated. Although 
the book of rules, published in 1904 and still in use, provides that 
all property and cash shall be accounted for by disbursing agents, it 
does not prescribe the method by which such accounting shall be 
made. 

One or two agencies have attempted a double-entry system. With 
the exception of these, the accounting methods employed at the vari- 
ous reservations are single entry. There has been made an attempt 
at uniformity in account keeping by having supervisors visit the 
different reservations and make suggestions. A certain degree of 
uniformity has also resulted from the requirements laid on disburs- 
ing officers with respect to their quarterly and annual reports. The 
form of report is prescribed, but the means for filling out the report 
; s largely left to the agents. They are only bound to maintain 
records which will provide for them the financial data and statistics. 

PAY ROLTS. 

Pay rolls are prepared in such a manner that they do not lend 
I themselves to a ready audit. Under the present method of reporting 
I Jie services of Indians and others on the reservations it is impossible 
,* . to check the accuracy of the charges as stated on the pay roll. There 
»*^s nothing to prevent the disbursing officer from employing labor, 
luen, and teams for any work which he may deem advisable and 
* ^barging their time to appropriations which are not applicable. He 
Inay employ laborers on any work at will and charge their services 
\o any appropriation in which he has the largest balance. There is 
nothing in the pay rolLor in any other reports of the disbursing 
officer, or of any other employee of the Office of Indian Affairs or 
auditor's office, to show that the persons employed actually perform 
services. 

The auditors carefully check the figures as stated on the pay rolls, 
t>ut really perform only an arithmetical service. They are not able 
to check and audit the expenditure of this money in any way which 
Ivill assure them that a proper expenditure has been made. 
\ Pay rolls are not unique in this particular respect. Nearly all 
nocuments, reports, pay rolls, etc., are returned to the Office of In- 
dian Affairs with a certificate of a disbursing officer. The disbursing 
officer's certificate is the only certificate which appears, although 
occasionally other employees of the Indian Service at the reserva- 
tions provide certificates with regard to expenditure and receipt of 

oney. 



86 



BUSINESS AXD ACCOUXTIXG METHODS IXDIAX BUREAU. 



LACK OF CONTROL OYER DISBURSING OFFICER. 

Under the present method there is little or no control by the 
central office over the disbursing officer. Because each disbursing 
officer is given the power to exercise judgment as to which of the 
many funds at his disposition he shall use. he obtains authorities 
of sufficiently broad designation to make it possible to expend money 
from any one of several, and no means is provided by which either 
the Office of Indian Affairs or the auditor's office may determine 
the propriety of the expenditure. There is no proper method pro- 
vided for ascertaining the amount of money received and disbursed 
by disbursing officers. Only by careful checking of such accounts 
as show discrepancies does it ever come to a balancing of entries 
made against the appropriation or account in question. There is 
no control over the disbursing officer for the properties which are 
in his possession. There is no means provided by which he is 
accountable to the central office for the properties which he hf 
received and which he has disbursed. In fact, there is no way othe 
than by a physical examination of the property, the taking of an 
inventory, and by a most detailed and tedious check that the status 
of the property on hand and what should be on hand could be ascer- 
tained. There is an absolute lack of coordination between the vari- 
ous agencies. Each agency employs such methods as seem advisable 
and desirable to the disbursing officer. 

BUDGET ESTIMATES. 

The disbursing officers in preparing their budget estimates in tht 
main prepare them on arbitrary estimates of their future needs. 
Disbursing officers, anticipating a cut to be made in the central office, ■ 
overestimate their needs and overemphasize in their "justifications" 
the importance of certain items. They have no means at their com- 
mand, except such memoranda and such records as they may keep 
for their own personal use and guidance, from which they can detei 
mine with any degree of accuracy what their needs will be a yea 
hence. This is because they do not maintain records of work per y 
formed in a manner which lend themselves to comparison. Althougl 
they provide statistical information, this statistical information i c | 
not of such a nature as to aid in preparation of the estimates. 

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